citibank, n.a. (bangladesh branches) report and financial … · 2018-03-06 · as at and for the...

Notes to the financial statementsas at and for the year ended 31 December 2015

Citibank, N.A. (Bangladesh Branches)

Report and financial Statements as at andfor the year ended 31 December 2017

INDEPENDENT AUDITOR’S REPORT TO THE MANAGEMENT OFCITIBANK, N.A.

BANGLADESH BRANCHES

We have audited the accompanying financial statements of Citibank, N.A. Bangladesh Branches (the “Bank”) which comprise the balance sheet as at 31 December 2017 and profit and loss account, cash flow statement and statement of changes in equity for the year then ended, and a summary of significant accounting policies, other explanatory notes and annexure thereto.

Management Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements of the Bank that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in Note 2.1 and for such internal control as management determines is necessary to enable the preparation of financial statements of the Bank that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and the local central bank (Bangladesh Bank) Regulations require the Management to ensure effective internal audit, internal control and risk management functions of the Bank. The Management is also required to make a self-assessment on the effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and forgeries.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements of the Bank give a true and fair view of the financial position of the Bank as at 31 December 2017, and of its financial performance and cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in Note 2.1.

Report on Other Legal and Regulatory RequirementsIn accordance with the Companies Act 1994, the Bank Company Act 1991 and the rules and regulations issued by Bangladesh Bank, we also report that:

1 Status of the Bank

1.1 Legal form of the bank Citibank, N.A. Bangladesh Branches commenced its banking operations in Dhaka, Bangladesh from 24 June 1995 after obtaining licence from Bangladesh Bank dated 26 January 1995. Citigroup Inc. (formed from the merger of Citicorp Inc. and Travelers Group Inc. on 8 October 1998) a holding company under the law of United States of America, is the sole shareholder of Citibank, N.A. The Offshore Banking Unit (OBU) started its operations on 26 April 2006.

1.2 Nature of business Citibank N.A. started its operations in Bangladesh in 1987, with the opening of a representative office. The Bank opened its first full-service branch in Dhaka in 1995. The Bank now has three branches, these are in Motijheel, Gulshan and Chittagong and two EPZ service counters of its offshore banking units with 151 employees serving corporate customers.

Since 1987, Citi’s operations encompass primarily on corporate and commercial banking services under the Institutional Clients Group (ICG). In Bangladesh, Citi provides a comprehensive range of financial services including treasury management, transaction services, foreign exchange and structured finance to corporate clients, governments and financial institutions. In 2008 the Bank started to offer Direct Custody and Clearing (DCC) services to its offshore clients.

2 Basis of preparation

2.1 Statement of compliance The financial statements of the Bank are prepared in accordance with Bangladesh Financial

Reporting Standards (BFRS) and the requirements of the Bank Company (amendment) Act, 2013, the rules and regulations issued by Bangladesh Bank and the Companies Act 1994. In case any requirement of the Bank Company (amendment) Act, 2013, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS, the requirements of the Bank Company (amendment) Act, 2013, and provisions and circulars issued by Bangladesh Bank shall prevail. Material departures from the requirements of BFRS are as follows:

i) Investment in shares and securities BFRS: As per requirements of BAS 39 investment in shares and securities generally fall either

under “at fair value through profit and loss account” or under “available for sale” where any change in the fair value (as measured in accordance with BFRS 13) at the year-end is taken to profit and loss account or revaluation reserve respectively.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet respectively. Provision should be made for any loss arising from diminution in value of investment; otherwise investments are recognised at costs. Citi recognizes investment in shares and securities at cost basis.

ii) Revaluation gain/loss on Government securities BFRS: As per requirement of BAS 39 where T-bills and T-bonds fall under the category of “held for trading”, any change in the fair value (as measured in accordance with BFRS 13) of held for trading assets is recognised through profit and loss account.

T-bills and T-Bonds designated as "held to maturity" are measured at amortised cost method and interest income is recognised through the profit and loss account. Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as a part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortisation of discount are recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and gains or losses on amortisation are recognised in other reserve as a part of equity.

iii) Provisions on loans and advances

BFRS: As per BAS 39 an entity should start the impairment assessment by considering whether objective evidence of impairment exists for financial assets that are individually significant. For financial assets that are not individually significant, the assessment can be performed on an individual or collective (portfolio) basis. Bangladesh Bank: As per BRPD circular No.16 (18 November 2014), BRPD circular No.14 (23 September 2012), BRPD circular No. 19 (27 December 2012) and BRPD circular No. 05 (29 May 2013) a general provision at 0.25% to 5% under different categories of unclassified loans (good/standard loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad losses has to be provided at 5%, 20%, 50% and 100% respectively for loans and advances depending on time past due. Again as per BRPD circular no. 10 dated 18 September 2007 and BRPD circular no. 14 dated 23 September 2012 , a general provision at 1% is required to be provided for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39.

iv) Other comprehensive income BFRS: As per BAS 1 Other Comprehensive Income (OCI) is a component of financial statements

or the elements of Other Comprehensive Income are to be included in a single Other Comprehensive Income Statement. Bangladesh Bank: Bangladesh Bank has issued templates for financial statements through BRPD circular no. 14 dated 25 June 2003 which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income nor are the elements of Other Comprehensive Income allowed to be included in a single (OCI) statement. As such the Bank does not prepare an OCI statement. However elements of OCI, if any, are shown in the statements of changes in equity.

v) Financial instruments – presentation and disclosure In several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in BAS 39. As such some disclosure and presentation requirements of BFRS 7 and BAS 32 cannot be made in the financial statements.

vi) Repo and Reverse Repo transactions BFRS: When an entity sells a financial asset and simultaneously enters into an agreement to

repurchase the asset (or a similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is treated as a loan and the underlying asset continues to be recognised in the entity’s financial statements. The difference between selling price and repurchase price will be treated as interest expense. Same rule applies to the opposite side of the transaction (reverse repo).

Bangladesh Bank: As per DOS Circular letter no. 6 dated 15 July 2010 and subsequent clarification in DOS circular no. 02 dated 23 January 2013, when a bank sells a financial asset and simultaneously enters into an agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo or stock lending), the arrangement is accounted for as a normal sales transaction and the financial asset is derecognised in the seller’s book and recognised in the buyer’s book.

However, as per DMD circular letter no. 7 dated 29 July 2012, non primary dealer banks are eligible to participate in the Assured Liquidity Support (ALS) programme, whereby such banks may enter collateralised repo arrangements with Bangladesh Bank. Here the selling bank accounts for the arrangement as a loan, thereby continuing to recognise the asset.

vii) Financial guarantees

BFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee liabilities are recognised initially at their fair value (as measured in accordance with BFRS 13), and the initial fair value is amortised over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, financial guarantees such as letter of credit, letter of guarantee will be treated as off-balance sheet items. No liability is recognised for the guarantee except the cash margin.

viii) Cash and cash equivalent BFRS: Cash and cash equivalent items should be reported as cash item as per BAS 7. Bangladesh Bank: Some cash and cash equivalent items such as ‘money at call and on short

notice’, treasury bills, Bangladesh Bank bills and prize bond are not shown as cash and cash equivalents. Money at call and on short notice are presented on the face of the balance sheet, and treasury bills, Bangladesh Bank bills and prize bonds are shown in investments.

ix) Non banking asset BFRS: No indication of non banking asset is found in any BFRS. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, there must exist a face item

named non banking asset.

x) Cash flow statement BFRS: Cash flow statement can be prepared either in direct method or in indirect method. The

presentation is selected to present these cash flows in a manner that is most appropriate for the business or industry. The method selected is applied consistently.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, cash flow is the mixture of direct and indirect methods

xi) Balance with Bangladesh Bank: (CRR) BFRS: Balance with Bangladesh Bank should be treated as other asset as it is not available for use in day to day operations as per BAS 7.

Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.

xii) Off-balance sheet items BFRS: There is no concept of off-balance sheet items in any BFRS; hence there is no requirement

for disclosure of off-balance sheet items. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, off balance sheet items (e.g.

L/C, L/G, etc.) must be disclosed separately on the face of balance sheet.

xiii) Disclosure of appropriation of profit BFRS: There is no requirement to show appropriation of profit in the face of statement of

comprehensive income. Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, an appropriation of profit

should be disclosed in the face of profit and loss account.

xiv) Loans and advance net of provision BFRS: Loans and advances should be presented net of provisions.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, provision on loans and advances are presented separately as liability and cannot be netted off against loans and advances. xv) Presentation of Intangible Assets BFRS: An intangible asset must be identified and recognised, and the disclosure must be given as per BAS 38. Bangladesh Bank: There is no regulation for intangible assets in BRPD circular no. 14 dated 25 June 2003.

xvi) Recognition of derivatives BFRS: As per BAS 39, all derivatives including forward contracts are initially recognised at fair

value (as measured in accordance with BFRS 13) which is generally the transaction price. Subsequent to initial recognition, derivatives are classified as "fair value through profit & loss" and changes in Fair value are recognised in profit and loss accounts.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, derivative contracts are disclosed outside of balance sheet exposures.

Hoda Vasi Chowdhury & CoChartered Accountants

2017 2016

Taka Taka

Balance Sheet as at 31 December 2017

Notes

S. H. Aslam HabibChief Financial Officer, Bangladesh

As per our report of same date.

Auditor

Hoda Vasi Chowdhury & CoDhaka, 22 February 2018

Cash flow statement for the year ended 31 December 2017

2017 2016

Taka Taka

N. RajashekaranManaging Director and

Citi Country Officer, Bangladesh

Dhaka, 22 February 2018

Profit and Loss Account for the year ended 31 December 2017 Notes to the financial statementsas at and for the year ended 31 December 2017

S. H. Aslam HabibChief Financial Officer, Bangladesh

As per our report of same date.

Auditor

Hoda Vasi Chowdhury & CoDhaka, 22 February 2018

N. RajashekaranManaging Director and


2017 2016

Taka TakaNotes

Interest income 20 783,469,352 718,068,572 Interest paid on deposits and borrowings 21 (92,161,126) (52,637,686)Net interest income 691,308,226 665,430,886 Income from investments 22 419,561,437 472,457,144 Commission, exchange and brokerage 23 990,502,409 729,871,806 Other operating income 24 3,770,664 360,109 Total operating income 2,105,142,736 1,868,119,945

Salaries and allowances 25 472,036,462 449,745,209 Rent, taxes, insurance, electricity, etc. 172,065,562 166,231,727 Legal expenses 3,409,058 676,942 Postage, stamps, telecommunication, etc. 28,282,938 21,469,769 Stationery, printing, advertisement, etc. 23,034,782 27,992,536 Citi Country Officer's salary and allowances 53,822,532 47,460,549 Auditors' fees 750,000 750,000 Depreciation and repairs of bank's assets 26 70,838,816 80,289,412 Other expenses 27 167,591,683 164,732,181 Total operating expenses 991,831,833 959,348,325 Profit before provisions 1,113,310,902 908,771,620 Provision for loans and advances: Specific provision for classified loans and advances 14.1 (52,500) (43,500)General provision for unclassified loans andadvances 14.1 (61,032,648) (13,874,107)Provision for off balance sheet exposures 14.2 8,406,673 (12,377,077)Provision for diminution in value of investments - - Provision for nostro accounts - 40,035 Total provisions (52,678,475) (26,254,649)Total profit before income tax 1,060,632,427 882,516,971 Provision for income tax: Current tax 28 (592,077,363) (481,644,399)Deferred tax 28 42,310,974 43,405,598 (549,766,389) (438,238,801)Net profit after tax 510,866,038 444,278,170

Appropriations Profit remitted to Head Office - -

The annexed notes 1 to 37 and annexures A to J form an integral part of these financial statements.

we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;

to the extent noted during the course of our audit work performed on the basis stated under the Auditor’s Responsibility section in forming the above opinion on the financial statements of the Bank and considering the reports of the Management to Bangladesh Bank on anti-fraud internal controls and instances of fraud and forgeries as stated under the Management’s Responsibility for the Financial Statements and Internal Control:

(a) internal audit, internal control and risk management arrangements of the Bank as disclosed in the financial statements appeared to be materially adequate;

b) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Bank during the year ended 31 December 2017;

in our opinion, proper books of account as required by law have been kept by the Bank so far as it appeared from our examination of those books and proper returns adequate for the purpose of our audit have been received from branches not visited by us; the balance sheet and profit and loss account of the Bank together with the annexed notes dealt with by the report are in agreement with the books of account and returns;

the expenditures incurred was for the purpose of the Bank’s business; the financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and accounting standards as well as related guidance issued by Bangladesh Bank;

adequate provisions have been made against classified loans and advances; the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements; the information and explanations required by us have been received and found satisfactory;

we have reviewed over 80% of the risk weighted assets of the Bank and spending over 2,150 person hours; and

Capital Adequacy Ratio (CAR) as required by the Bangladesh Bank has been maintained adequately during the year.

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

(xi)

Property and assets

Cash (including foreign currencies)Cash in hand Balances with Bangladesh Bank and its agent bank(s)

Balance with other banks and financial institutions Inside BangladeshOutside Bangladesh

Money at call and short notice

InvestmentsGovernment securitiesReverse Repo with Bangladesh BankOther

Loans and advancesLoans, cash credits, overdraftsBills purchased and discounted

Fixed assets including premises,furniture and fixtures

Other assets

Non banking assets

Total assets

Liabilities and capital

Liabilities

Borrowings from other banks, financial institutions and agents

Deposits and other accounts Current account and other accounts, etc. Bills payable Savings deposits Fixed deposits Bearer certificates of deposits Other deposits

Other liabilities

Total liabilities

4

5

6

7

8

9

10

11

12

13

14

108,100,289 7,004,582,870

7,112,683,159

741,694,945 3,447,018,449 4,188,713,394

-

8,365,494,964 -

6,000,000 8,371,494,964

16,252,001,403 89,519,875

16,341,521,278

178,282,772

1,718,998,514

- 37,911,694,081

64,580,456

19,841,252,892 1,482,787,324 438,420,098

3,877,728,096 - -

25,640,188,410

2,286,370,238

27,991,139,104

192,197,277 9,156,354,787

9,348,552,064

809,798,507 8,750,654,253 9,560,452,760

1,520,000,000

8,839,605,995 -

6,000,000 8,845,605,995

8,804,163,236 150,689,014

8,954,852,250

218,135,362

1,297,372,378

- 39,744,970,809

452,122,084

25,550,565,148 1,870,116,007 289,677,290 255,660,346

- -

27,966,018,791

2,136,040,300

30,554,181,175

Statement of Changes in Equity for the year ended 31 December 2017

Particulars

Balance as at 1 January 2016 Exchange difference

Net profit for the year Unrealised surplus on revaluation of HFT securities (net of deferred tax liabilities)

Actuarial gain/(loss) Profit remitted to Head Office Balance as at 31 December 2016 Exchange difference

Net profit for the year Unrealised surplus on revaluation of HFT securities

(net of deferred tax liabilities) Actuarial gain/(loss) Profit remitted to Head Office

Balance as at 31 December 2017

4,529,873,431

10,962,628

-

-

-

-

4,540,836,059

230,792,176

-

-

-

-

4,771,628,235

(29,712,017)

-

-

(13,778,054)

(56,028,938)

-

(99,519,009)

-

-

(12,471,975)

579,104

-

(111,411,880)

5,079,455,174

-

444,278,170

-

-

(774,260,760)

4,749,472,584

-

510,866,038

-

-

-

5,260,338,622

9,579,616,588

10,962,628

444,278,170

(13,778,054)

(56,028,938)

(774,260,760)

9,190,789,634

230,792,176

510,866,038

(12,471,975)

579,104

-

9,920,554,977

Fund deposited with

Bangladesh Bank Other

reserveProfit and

loss account Total

Taka Taka Taka Taka

Citibank, N.A.

8 Gulshan Avenue, Gulshan - 1, Dhaka 1212, Bangladesh

A company incorporated in the USA with limited liabilities.

© 2018 Citigroup Inc. All rights reserved. Citi, Citi and arc Design are service and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.

of 11

Equity Fund deposited with Bangladesh Bank as capital 15.2 4,771,628,235 4,540,836,059

Other reserve 16 (111,411,880) (99,519,009)

Profit and loss account 17 5,260,338,622 4,749,472,584

Total equity 9,920,554,977 9,190,789,634

Total liabilities and equity 37,911,694,081 39,744,970,809

Off-balance sheet items

Contingent liabilities Acceptances and endorsements 18.1 4,351,373,617 3,090,423,611

Letters of guarantee 18.2 2,154,178,104 2,302,591,334

Irrevocable letters of credit 18.3 7,634,415,381 8,649,898,954

Bills for collection 18.4 - -

Other contingent liabilities - -

14,139,967,102 14,042,913,899

Other commitments 18.5 Documentary credits and short term trade - related transactions 561,081,399 113,808,231

Forward assets purchased and forward deposits placed 3,873,894,767 5,070,545,836

Undrawn note issuance and revolving underwriting facilities - -

Undrawn formal standby facilities, credit lines and othercommitments - 1,066,600,000

4,434,976,166 6,250,954,067 Others 18.6 Value of travelers' cheques on hand - -

Value of unprocessed cheques - -

Value of Bangladesh Sanchaypatra on hand 181,925,000 235,925,000

Value of Bangladesh Bank USD bond on hand 219,196,350 208,594,350

401,121,350 444,519,350

Total off-balance sheet items including contingent liabilities 18,976,064,618 20,738,387,316

Cash flows from operating activitiesInterest receipts in cashInterest paymentsDividend receiptsFee and commission receipts in cash Recoveries of loans previously written offCash payments to employeesCash payment to suppliersIncome taxes paidIncome from trading securityReceipts from other operating activitiesPayment for other operating activitiesOperating profit before changes in operating assets and liabilities

Increase/decrease in operating assets and liabilitiesStatutory depositsPurchase/Sale of trading securitiesLoans and advances to other banksLoans and advances to customersOther assetsDeposits from other banksDeposits from customersBorrowing from other banks and financial institutionsTrading liabilitiesOther liabilities

Net cash flow from operating activities

Cash flows from investing activitiesProceeds from sale of securitiesPayment for purchase of securitiesPurchase of fixed assetsProceeds from sale of assetsNet cash flow from investing activities

Cash flows from financing activitiesProfit remitted to head officeFund received from head office as capital injectionEffect of change in foreign exchange rate on capital kept in FCYNet cash flow from financing activities

Net increase/(decrease) in cash and cash equivalents (A+B+C)

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year (D+E) (note 30)

A)

B)

C)

D)

E)

F)

745,791,933 (82,115,944)

7,500,000 990,502,409

- (540,052,374)

(195,837,516) (533,131,137) 375,399,503

3,380,007 (135,130,175) 636,306,705

-

1,319,067,268 -

(7,353,162,550) (441,589,384) 804,085,387

(3,129,915,768) (387,541,628)

- 57,626,410

(9,131,430,265) (8,495,123,559)

- -

(18,766,032) 445,380

(18,320,652)

- -

230,792,176

230,792,176

(8,282,652,035)

21,329,227,591

13,046,575,556

775,248,069 (58,957,414)

7,500,000 729,871,806

- (536,084,142) (176,152,970) (480,143,519)

402,052,112 -

(132,645,522) 530,688,420

- (1,503,336,849)

- (730,361,315)

(11,713,064) 261,601,868

1,250,356,043 (276,642,811)

- 241,022,183

(769,073,945) (238,385,525)

- -

(21,361,658) 791,877

(20,569,781)

(774,260,760) -

10,962,628

(763,298,132)

(1,022,253,438)

22,351,481,029

21,329,227,591

The annexed notes 1 to 37 and annexures A to J form an integral part of these financial statements.


Financial Statements as at and forthe year ended 31 December 2017

Value of investments has been shown as under:

Unquoted shares At cost or book value of the last audited balancesheet whichever is lower

Government treasury bills and bonds (HTM) At present value (using marking to market concept)

Government treasury bills and bonds (HFT) At present value (using marking to market concept)

Prize bond At cost

Details are shown in Note 7.

Particulars Rates

2017 2016

Specific provision on:Substandard and doubtful agricultural loans 5.00% 5.00%Substandard loans and advances 20.00% 20.00%Doubtful loans and advances 50.00% 50.00%Bad/loss loans and advances 100.00% 100.00%

Category of assets Rate of depreciationFurniture and fixtures 10% - 33.33% Equipment 10% - 33.33% Motor vehicles 20%

In accordance with BRPD circular no. 14 dated 23 September 2012, interest accrued on sub-standard (SS) and Doubtful (DF) loans are credited to "interest suspense account" included in "other liabilities" instead of income account. Interest from loans and advances ceases to be accrued when they are classified as Bad and loss category.

As per the BRPD circular no. 03 dated 16 February 2016 and BRPD circular no. 6 dated 19

March 2015, the Bank is required to identify its good borrowers and to pay 10% rebate on the interest earned from them during the year. Interest income for loans and advances are recognized taking into account the amount of rebate allowed to the customers.

3.12.2 Income from investment Interest income on investments in government and other securities is recognised on accrual

basis. Investment income includes interest income, capital gain, and revaluation loss on government securities. Investment income also includes dividend on investment in shares. Dividend income is recognised when the right to receive payment is established. This is the ex-dividend date for the equity securities.

3.12.3 Fees and commission income The Bank earns fees and commissions from a diverse range of services provided to its

customers. Commission on Letter of Guarantee is recognised on accrual basis. Other fees and commission income is recognised on a realisation basis.

3.12.4 Exchange Income Exchange income includes all gains and losses from foreign currency transactions.

3.13 Interest paid on borrowing and other deposits Interest paid on deposits and other accounts except fixed deposit is accrued on a monthly

basis, but credited to customer account on half yearly basis. Interest on fixed deposit is accrued on a daily basis and credited to customer account on maturity of fixed deposit. Interest on borrowing from other banks is accrued on a daily basis and paid through Bangladesh Bank account on maturity. All other expenses are recognised on accrual basis.

3.14 Post Employment benefit The retirement benefits accrued for the employees of the Bank as on reporting date have

been accounted for in accordance to the provisions of Bangladesh Accounting Standard (BAS-19, Employee Benefits).

3.14.1 Provident fund Provident fund scheme (defined contribution plan) is given to the eligible staff of the Bank in

accordance with the rules of the locally registered provident fund constituted under an irrevocable trust. Payments to the provident fund are charged as expense in the profit and loss as they fall due.

3.14.2 Gratuity fund The Bank operates a funded gratuity scheme duly approved by the National Board of

Revenue. Under this scheme, the Bank’s obligation to the members of the scheme is to pay one month’s last drawn salary for each year of service on the termination of employment. Members who leave the Bank within the first five years of service are not entitled to any benefits under this scheme. The scheme is considered as a defined benefit plan as it meets the recognition criteria specified for this purpose. The fund is managed in accordance with rules of the locally registered fund constituted under an irrevocable trust. Actuarial valuation of the gratuity scheme is made periodically to assess the adequacy of the liabilities provided for the scheme BAS 19 Employee Benefits.

In accordance with the requirements of BAS 19: Employee Benefits, the Bank’s net obligation in respect of its gratuity fund is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and any unrecognised past service costs and the fair value of any plan assets are deducted. The calculation is performed by a qualified actuary using the Projected Unit Credit method. Actuarial gains and losses that arise are recognised in equity and presented in the statement of Changes in Equity in the period they arise. Past service costs are recognised immediately to the extent that benefits are vested and are otherwise recognised over the average period until benefits are vested on a straight line basis.

3.15 Short-term employee benefits Short-term employee benefits are employee benefits which fall due wholly within twelve

months after the end of the period in which the employee renders the related service including salaries, bonuses and other allowances.

3.16 Provisions and accrued expenses In compliance with BAS 37, provisions and accrued expenses are recognised in the financial

statements when the Bank has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

3.17 Provisions for off balance sheet exposures In compliance with Bangladesh Bank guidelines off balance sheet items are disclosed under

contingent liabilities. As per BRPD Circular No.14 dated 23 September 2012, the Bank is required to maintain provision at 1% against gross off-balance sheet exposures (cash margin or value of eligible collateral will not be deducted while computing off-balance sheet exposure). Details are shown in note 14.2.

3.18 Provisions on balances with other banks and financial institutions (Nostro accounts) Provisions made for unsettled debit transactions for more than three months on nostro

accounts are reviewed at each balance sheet date by management and certified by external auditors in accordance with Bangladesh Bank Foreign Exchange Policy Department, Circular No. FEOD (FEMO)/01/2005-677 dated 13 September 2005. Details are shown in note 14.

3.19 Provisions for other assets BRPD Circular no. 14 dated 25 June 2001 requires a provision of 100% on other assets which

are outstanding for one year and above.

3.20 Provision for taxation

3.20.1 Income tax Provision for taxation has been calculated using tax rates as prescribed in the Income Tax

Ordinance (ITO) 1984 and relevant Special Regulatory Orders (SRO) and any adjustment to tax payable in respect of previous years.

3.20.2 Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates

enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of prior years.

Provision for taxation for the year ended 31 December 2017 has been made on the basis of

the provisions of the income Tax Ordinance 1984 and the Finance Act 2017. Currently the income tax rate applicable for banks is 42.5%.

3.20.3 Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences:

- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

- temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and

- temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities against current tax assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax relating to unrealised surplus on revaluation of held to maturity (HTM) securities and land and buildings are recognised directly in revaluation reserve as a part of equity and is subsequently recognised in profit and loss account on maturity of the security and disposal of land and buildings. Details are shown in note 14.4.2.

3.21 Impairment of non-financial assets The carrying amounts of the Bank's non-financial assets, other than deferred tax assets, are

reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its Cash Generating Unit (CGU) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

For the purpose of impairment testing, assets that cannot be tested individually are grouped

together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the other assets in the CGU (group of CGUs) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.22 Reconciliation of inter-bank/inter-branch account Books of account with regard to inter-bank (in Bangladesh and outside Bangladesh) are

reconciled and no material differences were found which may affect the financial statements significantly.

3.23 Core risk management BRPD circulars no.17 dated 07 October 2003, BRPD circular no. 04 dated 05 March 2007 and DOS circular no. 2 dated 15 February 2012 require banks to put in place an effective risk management system. The risk management system of the Bank covers the following six broad risk areas:

Credit risk Foreign exchange risk Asset liability management risk Money laundering risk Internal control and compliance risk

xvii) Recognition of interest in suspense BFRS: Loans and advances to customers are generally classified as "loans and advances" as per

BAS 39 and interest income is recognised through interest rate method over the life of the loan. Once a loan is impaired, interest income is recognised in profit and loss account on the same basis based on revised carrying amount.

Bangladesh Bank: In accordance with BRPD circular no. 14 dated 23 September 2012, interest accrued on sub-standard (SS) and Doubtful (DF) loans are credited to "interest suspense account" included in "other liabilities" instead of income account. Interest from loans and advances ceases to be accrued when they are classified as Bad and loss category.

2.2 Basis of measurement

The financial statements of the Bank have been prepared on the historical cost basis except for the following: - Government treasury bills and bonds designated as 'Held for trading (HFT)' at present value using marking to market concept with gains credited to revaluation reserve as per DOS circular 05 dated 26 May 2008 and DOS circular 05 dated 28 January 2009.

- Government treasury bills and bonds designated as 'Held to maturity (HTM)' and remeasured Government treasury bond at present value using amortisation concept as DOS circular 05 dated 26 May 2008 and DOS circular 05 dated 28 January 2009.

- Investment in shares of listed companies are valued at market price and unlisted companies at cost or book value of last audited balance sheet whichever is lower. - Net asset/(liability) of defined benefit scheme which is net of present value of the defined benefit obligations, total plan assets and other related items as required by BAS 19.

2.3 Functional and presentation currency These financial statements are presented in Bangladesh Taka (Taka/Tk) which is the Bank's

functional currency. Except as otherwise indicated, financial information presented in Taka has been rounded to the nearest integer.

2.4 Use of estimates and judgments The preparation of these financial statements in conformity with Bangladesh Bank Circulars and

BFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described below:

(a) Provisions for loans and advances The Bank assesses its loans and advances for objective evidence of impairment on a regular

basis and particularly at year end. While the primary criteria set out in BRPD circular no. 14 dated 23 September 2012, for determining whether a loan is impaired is objective, being based on borrower's ability to make timely repayments, loans and advances may also be classified based on qualitative judgment. This involves making assessments regarding the economic environment in which borrowers operate in addition to making judgments about a borrower's financial situation and net realisable value of any underlying collateral.

(b) Taxation The estimation of current tax provision involves making judgments regarding admissibility of certain expenses as well as estimating the amount of other expenses for tax purposes.

In addition, the recognition of deferred tax assets requires the Bank to estimate to which it is probable that future taxable profits will be available against which the deferred tax may be utilised.

(c) Post employment benefits-asset/(liability) from gratuity The determination of Bank's asset/(liability) from gratuity involves the use of estimates

regarding demographic variables (such as employee turnover and mortality) and financial variables (such as future increases in salaries and medical costs) that will influence the cost of the benefit.

(d) Depreciation Depreciation is provided on a straight line basis over the estimated useful life of each item of

property, plant and equipment. The determination of useful life involves the use of estimates regarding expected use of the assets, expected physical wear and tear, technical or commercial obsolescence and legal or similar limits on the use of the asset.

2.5 Reporting period These financial statements cover one calendar year from 1 January to 31 December 2017.

The financial statements were authorised for issue by the Citi Country Officer and the Chief Financial Officer on 22 February 2018.

2.6 Cash flow statement Cash flow statement has been prepared in accordance with the BRPD Circular No. 14 dated 25

June 2003 issued by the Banking Regulation & Policy Department of Bangladesh Bank.

2.7 Statement of changes in equity The statement of changes in equity reflects information about the increase or decrease in net

assets or wealth.

2.8 Liquidity statements The liquidity statement of assets and liabilities as on the reporting date has been prepared based

on residual maturity term which has been given in the statement. 3 Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in

the financial statements.

3.1 Foreign currencies Transactions in foreign currencies are translated into the respective functional currency of the

operation at the spot exchange rate at the date of the transaction.

Monetary assets, liabilities and fund deposited with Bangladesh Bank as capital denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the spot exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on translation are recognised in the profit and loss account except for exchange rate differences on funds deposited with Bangladesh bank as capital, which is recognised directly in equity.

3.2 Cash and cash equivalents Cash and cash equivalents in cash flow statement include notes and coins in hand both restricted

and unrestricted balances held with Bangladesh Bank and its agent bank (including foreign currency) balance with other banks and financial institutions, money at call and short notice, 91 days treasury bills, Bangladesh Bank bills, reverse repo and prize bond.

3.3 Investments All investment securities are initially recognised at cost, including acquisition charges

associated with the investment. Premiums are amortised and discounts are accredited.

Held to maturity Investments which have, 'fixed or determinable payments' and are intended to be held to maturity are classified as 'Held to Maturity'.

Held for trading Investment classified in this category are acquired principally for the purpose of selling or

repurchasing in short trading or if designated as such by the management.

Revaluation As per DOS Circular letter no. 05 dated 26 May 2008 and DOS circular no. 05 dated 28 January 2009, HFT securities are revalued each week using Marking to Market concept by changes in the fair value and recognised in the profit and loss accounts and revaluation reserve as per Bangladesh Bank guidelines and circulars.

3.4 Loans and advances and provisions for loans and advances

a) Loans and advances are stated in the balance sheet on gross value. Loans and advances are initially measured at fair value, and subsequently measured at amortised cost.

b) Provision for loans and advances is made on the basis of periodical review by the management and of instructions contained in Bangladesh Bank BRPD Circular No. 15 dated 27 September 2017, BRPD Circular No. 16 dated 18 November 2014, BRPD Circular No. 14 dated 23 September 2012, BRPD Circular No. 19 dated 27 December 2012 and BRPD Circular No. 5 dated 29 May 2013. The guidance in the circular follows a formulaic approach whereby specified rates are applied to the various categories of loans as defined in the circular. These circulars also provide scope for further provisioning based on qualitative judgments. The rates of provision for different classifications are given below:

In accordance with BRPD Circular No.14 dated September 23, 2012, BRPD circular No. 05 dated 29 May 2013 and BRPD Circular No. 16 dated 18 November 2014, the rate of provision on the outstanding amount of loans kept in the 'Special Mention Account' will be the same as the rates stated above i.e. 0.25% against all unclassified loans of Small and Medium Enterprise (SME), 5% on the unclassified amount for Consumer Financing, 2% on the unclassified amount for Housing Finance, 1% on the unclassified amount of agricultural loans and 1% against all other unclassified loans.

c) Loans and advances are written off in accordance with BRPD circular no. 02 dated 13 January 2003 and BRPD circular no. 13 dated 07 November 2013 to the extent that:

i) there is no realistic prospect of recovery, and ii) against which legal cases are filed and classified as bad/loss as per guidelines of Bangladesh

Bank.

These write off however will not undermine/affect the claim amount against the borrower. Detailed memorandum records for all such write off accounts are maintained and followed up. Write-off loans and advances are reported to the Credit Information Bureau (CIB) of Bangladesh Bank.

Details are shown in note 8.

3.5 Fixed assets and depreciation

Recognition and measurement

Items of fixed assets excluding land are measured at cost/revaluation less accumulated depreciation and accumulated impairment losses, if any. Land is measured at cost/revaluation.

Cost includes expenditure that are directly attributable to the acquisition of asset and bringing to the location and condition necessary for it to be capable of operating in the intended manner.

When parts of an item of fixed asset have different useful lives, they are accounted for as separate items (major components) of property and equipment.

The gain or loss on disposal of an item of fixed asset is determined by comparing the proceeds from disposal with the carrying amount of the item of fixed asset, and is recognised in other income/other expenses in profit or loss.

Subsequent costs The cost of replacing a component of an item of fixed assets is recognised in the carrying amount

of the item if it is probable that the future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day to day servicing of fixed assets are recognised in the profit and loss account as incurred.

Depreciation Depreciation is recognised in the profit and loss account on a straight line basis, over the

estimated useful lives of each part of an item of fixed assets since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Bank will obtain ownership by the end of the lease. In case of acquisition of fixed assets, depreciation is charged from the month of acquisition, whereas depreciation on disposed off fixed assets is charged up to the month prior to the disposal. Asset category-wise depreciation rates are as follows:

Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted, if appropriate.

Retirement and disposals An asset is derecognised on disposal or when no future economic benefits are expected from its

use and subsequent disposal. Gains or losses arising from the retirement or disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised as gain and loss from disposal of asset under "Other operating income" in the profit and loss account.

3.6 Finance and operating leases Agreements which transfer to counterparties substantially all the risks and rewards incidental to

the ownership of assets, but not necessarily legal title, are classified as finance leases. When the Bank is a lessee under finance leases, the leased assets are capitalised and included in

“fixed assets” and the corresponding liability to the lessor is included in “Other liabilities”. A finance lease and its corresponding liability are recognised initially at the fair value of the asset or, if lower, the present value of the minimum lease payments. Finance charges payable are recognised as interest expense over the period of the lease based on the interest rate implicit in the lease so as to give a constant rate of interest on the remaining balance of the liability.

All other leases are classified as operating leases. When the Bank is the lessee under an operating lease, leased assets are not recognised in the balance sheet. Rentals payable, including rent paid in advance, under operating leases are accounted for on a straight-line basis over the period of the lease, unless another systematic basis is more representative of the time pattern of the user’s benefit, and are included in “Rent, taxes, insurance, electricity etc.”

3.7 Borrowings from other banks, financial institutions and agents

Borrowings from other banks, financial institutions and agents includes interest-bearing borrowings against securities from Bangladesh Bank and other banks and call borrowing from other banks. These items are brought to financial statements at the gross value of the outstanding balance.


3.8 Deposits and other accounts Deposits and other accounts include non interest-bearing current deposit redeemable at call,

interest bearing on demand and short-term deposits, savings deposit and fixed deposit. These items are brought to financial statements at the gross value of the outstanding balance.


3.9 Other liabilities Other liabilities comprise items such as provision for loans and advances, provision for taxation,

interest payable, interest suspense, accrued expenses etc. Other liabilities are recognised in the balance sheet according to the guidelines of Bangladesh Bank, Income Tax Ordinance 1984 and internal policy of the Bank.


3.10 Fund deposited with Bangladesh Bank This represents amounts deposited with Bangladesh Bank in foreign currency as a part of

minimum capital requirement.

According to subsection 3 of Section 13 of the Bank Company (amendment) Act, 2013 as amended by BRPD Circular no. 18 dated 21 March 2014 and "Guidelines on Risk Based Capital Adequacy for Banks (Basel III) as of December 2014" of Bangladesh Bank, all banks are required to deposit with Bangladesh Bank the higher of Tk. 4,000 million and minimum capital requirement calculated as 10% (2016: 10%) of risk weighted assets. In addition to minimum capital requirement. Capital Conversation Buffer (CCB) to be maintained in the form of CET1 at 0.625% per year from 2016 to 2019.


3.11 Contingencies

3.11.1 Contingent liabilities A contingent liability is: A possible obligation that arises from past events and the existence of which will be confirmed

only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or A present obligation that arises from past events but is not recognised because:

* it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

* the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are not recognised but disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is reliably estimated.

3.11.2 Contingent assets A contingent asset is a possible asset that arises from past events and whose existence will be

confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the entity. An example is a claim that an entity is pursuing through legal processes, where the outcome is uncertain.

Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate. A contingent asset is disclosed where an inflow of economic benefits is probable.

3.12 Revenue recognition

3.12.1 Interest on loans and advances Interest income for all loans and advances are recognised in the profit and loss account using

the effective interest method in accordance with BAS 39. The effective method is a way of calculating the amortised cost of financial asset and allocating the interest income over the relevant periods.

The effective interest rate is the rate that exactly discounts estimated future cash receipts

or payments throughout the expected life of the financial asset or where appropriate, a shorter period, to the carrying amount of the financial asset.

When calculating the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument but not future credit losses. The calculation includes all amounts paid or received by the Bank that are an integral part of the effective interest rate of a financial asset, including transaction cost and all other premiums or discounts.

Interest on loans and advances is calculated on daily product basis and accrued at the end of each month but charged to customer accounts on quarterly basis.

Citibank, N.A.




of 11

Particulars Rates

2017 2016

General provision on: All unclassified loans and advances except following: 1.00% 1.00%Small and medium enterprise financing 0.25% 0.25%Consumer financing 5.00% 5.00%Housing finance and loans for professionals to setup business under consumer financing scheme 2.00% 2.00%Loan to BHs/MBs/SDs against shares 2.00% 2.00%Agricultural loans 1.00% 2.50%

7.7 Repo and Reverse-repo (other than Repo under ALS program)

7.7.1 Repo as at 31 December 2017 There were no repo outstanding as at 31 December 2017.

7.7.2 Transactions of Repo and Reverse-repo during the year 2017

2017Taka

2016Taka

7.2 Other investments (unquoted)

Central Depository

Bangladesh Ltd. (CDBL)* 6,000,000 6,000,000

Debentures and bond - -

Other investment - -

Gold, etc. - -

6,000,000 6,000,000

*The Bank holds 3,000,000 ordinary shares in CDBL of

Taka 10 each which is inclusive of 2,400,000 bonus shares.

7.3 Classification of treasury bills and government treasury bonds

Held to maturity (HTM)

Treasury bills - -

Treasury bonds - -

- -

Held for trading (HFT)

Treasury bills 1,745,160,504 1,682,935,760

Treasury bonds 6,620,315,960 6,256,447,468

Bangladesh Bank bills - 899,783,867

8,365,476,464 8,839,167,095

8,365,476,464 8,839,167,095

2017Taka

2016Taka

6 Money at call and short notice

7.4 Category wise grouping of treasury bills and government bonds Held to Maturity Securities (HTM) Treasury bills Held to Maturity Securities (HTM) 30 days Bangladesh Bank bills - - 91 day treasury bills - - 182 day treasury bills - - 364 day treasury bills - - 2 years treasury bills - - 5 year treasury bonds - - - -

Held For Trading Securities (HFT) 7 days Bangladesh Bank bills - 899,783,867 30 days Bangladesh Bank bills - - 91 day treasury bills 1,745,160,504 - 182 day treasury bills - 189,360,267 364 day treasury bills - 1,493,575,493 2 years treasury bills - - 5 year treasury bonds - -

1,745,160,504 2,582,719,627

Total treasury bills 1,745,160,504 2,582,719,627

Government Bonds Held to Maturity Securities (HTM) 1 year bond - - 3 years bond - - 5 years bond - - 15 years bond - - 20 years bond - - - - Held For Trading Securities (HFT) 1 year bond - - 2 years bond 2,388,117,010 1,804,732,977 5 years bond 3,911,609,672 4,334,426,546 10 years bond 320,589,278 117,287,945 15 years bond - - 20 years bond - - 6,620,315,960 6,256,447,468

Total government bonds 6,620,315,960 6,256,447,468

8,365,476,464 8,839,167,095

7.5 Cost and market value of investments Treasury bills (including Bangladesh Bank bills): Face value of HFT securities 1,750,000,000 2,600,000,000 Unamortised amount (4,812,128) (25,815,217) MTM gain (charged in Equity) 92,330 8,534,844 MTM loss (charged in P&L) (119,698) -

Market value 1,745,160,504 2,582,719,627 Government bond: Face value of HFT securities 6,417,200,000 5,854,900,000 Unamortised amount 472,785,307 304,165,723 MTM gain (charged in Equity) 1,180,713 97,381,745 MTM loss (charged in P&L) (270,850,060) -

Market value 6,620,315,960 6,256,447,468 Prize bond 18,500 438,900 Reverse Repo with Bangladesh Bank - - Central Depository Bangladesh Ltd. (CDBL)* 6,000,000 6,000,000

8,371,494,964 8,845,605,995

*As per last audited financial statement of CDBL, book value per share is higher than the cost price of the investment.

7.6 Maturity grouping of investments Repayable on demand 18,500 438,900 Not more than one month 1,309,193,455 999,715,323 Over one month but not more than three months 784,846,941 89,428,812 Over three months but not more than one year 2,693,173,634 4,223,681,047 Over one year but not more than five years 3,578,262,434 3,526,341,913 Over five years 6,000,000 6,000,000

8,371,494,964 8,845,605,995

2017

Taka

2016

Taka

Loans, cash credits, overdrafts 16,252,001,403 8,804,163,236 Bills purchased and discounted 89,519,875 150,689,014 16,341,521,278 8,954,852,2508.1 Loans and advances Inside Bangladesh Continuous loan 2,866,306,797 1,101,236,081 Demand Loan 13,247,232,610 7,413,663,380 Fixed term loan 14,278,677 14,278,677 Staff loan - 231,800,778 Short Term Agri-credit and Microcredit 213,703,194 193,873,334

16,341,521,278 8,954,852,250 Outside Bangladesh - -

16,341,521,278 8,954,852,250

8.2 Maturity grouping of loans and advances including bills purchased and discounted Repayable on demand 2,798,390,448 1,033,372,232 Not more than one month 3,722,105,081 2,332,798,947 More than one month but not more than three months 5,824,025,981 2,703,639,333 More than three month but less than one year 3,776,659,577 2,432,953,269 More than one year but less than five years - 231,800,778 More than five years 220,340,191 220,287,691

16,341,521,278 8,954,852,250

Maximum

outstanding

Taka

Minimum

outstanding

Taka

Daily Average

outstanding

Taka

Securities sold under repo

i) With Bangladesh Bank - - -

ii) With other banks and FIs - - -

Securities purchased under reverse repo

i) With Bangladesh Bank - - -

ii) With other banks and FIs - - -

8 Loans and advances



3.26 Comparatives: Figures of previous year have been rearranged whenever considered necessary to conform to current year's presentation. IAS 8: Accounting policies, changes in Accounting Estimates and Errors requires an entity to correct material prior period errors retrospectively by restating the comparative amounts for the prior period presented in which the error occurs. No corrections of errors were made in the current period.

3.27 Operating segments The Bank has no identified operating segment and as such presentation of segmental

reporting is not made in the financial statements as per BFRS 8.3.28 Events after the reporting period All material events after the reporting period are considered and where necessary, adjusted

for or disclosed in accordance with BAS 10: Events after the reporting period.4 Cash (including foreign currencies)

Foreign currency balance with Bangladesh Bank includes Tk. 4,771,628,235 (2016: Tk.

4,540,836,059) equivalent to USD 57,698,043.95 maintained as capital which has been adjusted for exchange rate differences resulted from revaluation of funds (USD) deposited with Bangladesh Bank as capital at Tk. 82.7 (2016: Tk.78.7).

4.1 Reconciliation with clearing accounts statement from Bangladesh Bank There were no unidentified transactions appearing in the Bank's balances with Bangladesh

Bank as at 31 December 2017. Transactions up to 20 November 2017 were completely adjusted. For the remaining balances, the unadjusted items have been identified and reconciliation process is in place.

4.2 Cash Reserve Ratio ( CRR ) and Statutory Liquidity Reserve (SLR) Cash Reserve Ratio (CRR) and Statutory Liquidity Reserve (SLR) have been calculated and

maintained in accordance with Section 33 of the Bank Company (amendment) Act, 2013 and of instructions contained in MPD Circular nos. 1 dated 23 June 2014& DOS Circular No. 1 dated Jan 19 2014 issued by Bangladesh Bank. The statutory Cash Reserve Ratio on the Bank's time and demand liabilities at the rate of 6.5% (bi weekly) and 6% (daily) has been calculated and maintained with Bangladesh Bank in current account. Cash reserve ratio maintained by the Bank, is shown below:

4.2.1 Cash Reserve Ratio ( CRR )

4.2.2 Statutory Liquidity Reserve ( SLR ) As per the MPD circular nos. 5 dated 01 December 2010, Bank's has maintained 19% Statutory Liquidity Reserve (SLR). On a new MPD circular nos. 2 issued on 1 dated 23 June 2014, 13% SLR has been maintained on the Bank's time & demand liabilities in the form of treasury bills, bonds and debentures including foreign currency balance with Bangladesh Bank. Statutory Liquidity Reserve maintained by the Bank, is shown below:

Information & Communication risk Technology Security risk The prime objective of the risk management is that the Bank undertakes well calculated

business risks to safeguard its capital, financial resources and growth of sustainable profitability. In this context, the Bank has formed a risk management committee to overview regular monitoring of those critical risk areas.

3.23.1 Credit risk Credit risk is one of the major risks faced by the Bank. This can be described as the situation

when a borrower or counterparty of the Bank will fail to meet its obligations in accordance with agreed terms and conditions. To assess and to mitigate the credit risk, the Bank has implemented Credit Risk Management (CRM) Manual, which is considered an important tool for retaining the quality and performance of the assets. Accordingly, the Bank’s credit risk management functions have been designed to address all these issues including risks that arises from global changes in banking, finance and related issues.

The Bank has defined segregation of duties for all credit risk related activities like credit approval, administration, monitoring and recovery functions.

3.23.2 Foreign exchange risk Foreign exchange risk is defined as situation when change in earnings may happen due to

unfavorable change in foreign exchange rates and the relevant currency position of the Bank. Treasury front office conducts deal for commercial purpose and back office of the treasury keep records and passes entries in books of accounts. As per Bangladesh Bank guidelines, the Treasury Department is operationally and physically divided into front office and back office to mitigate any risk. Separate telephone and fax lines were installed in the dealing room to meet Bangladesh Bank guidelines. In addition, the Bank has also implemented strong monitoring and control by setting limits on approval of a deal, net open position, maximum loss per day/month and DV01, which are monitored on a regular basis.

3.23.3 Asset liability management risk Changes in market liquidity and/or interest rate exposes Bank's business to the risk of loss.

The Bank has an Asset Liability Committee (ALCO) which is responsible for managing short-term and long-term liquidity to ensure that the Bank has adequate liquidity at all times and at the most appropriate funding cost. ALCO reviews liquidity requirements of the Bank, maturity of assets and liabilities, deposit and lending pricing strategy and the liquidity contingency plan. The Asset Liability Committee also monitors Balance Sheet risk, which is defined as potential changes in earnings due to changes in rate of interest and exchange rates which are not of trading nature.

3.23.4 Prevention of money laundering Money laundering risk is defined as the loss of reputation and expenses incurred as penalty

for being negligent in prevention of money laundering. For mitigating the risk, the Bank has designated Country Compliance Officer and Anti Money Laundering Compliance Officer, who independently review the transactions of the accounts to verify suspicious transactions. Manuals for Prevention of Money Laundering have been established and transaction profiling is in place. Training has been continuously given to all the categories of Executives and Officers for developing awareness and skill for identifying suspicious transactions and other activities relating to money laundering.

3.23.5 Internal control and compliance risk The internal control environment is the framework under which internal controls are

developed, implemented and monitored. It consists of the mechanisms and arrangements that ensure internal and external risks to which the Bank is exposed are identified; appropriate and effective internal controls are developed and implemented to soundly and prudently manage these risks; reliable and comprehensive systems are to be put in place to appropriately monitor the effectiveness of these controls. Citibank NA being one of the largest global banks has established an appropriate and effective internal control environment to ensure that the Bank is managed and controlled in a sound and prudent manner. The factors which together comprise the control environment are: a. Management Committee (MANCOM) that is actively concerned with sound corporate governance and that understands and diligently discharges its responsibilities by ensuring that the Bank is appropriately and effectively managed and controlled; b. Business Unit managements are those actively manage and operate the Bank in a sound and prudent manner; c. Control mechanism to monitor the effectiveness of the organizational and procedural controls is in place. An independent internal audit to engage a risk-based methodology in conducting periodic audits for the various businesses and functions in Bangladesh.

Three Lines of Defense: Citi relies on three lines of defense for the management of its risks and ensure effective control environment. These lines of defense are outlined in Global Operational Risk Management Policy which is summarized below.

First Line of Defense: The Business owns its risks, including the operational, reputational, legal and financial risks and is responsible for its management. In order to mitigate these risks, the Business is responsible for the design and operation of controls to reduce the likelihood of errors and lapses and to ensure ongoing compliance is embedded in all relevant decisions and operations. Businesses will define the segmentation structure they will use for implementing their Program (i.e. O&T or Operations, Technology or ICG Operations and ICG Technology, etc.). The business may rely on Functional Specialists (for example O&T) to implement certain responsibilities under the Policy. These specialists operating within and/or across managed businesses are responsible for advising on, contributing to, executing, and/or overseeing key controls in support of efficient and effective management of risks.

Second Line of Defense: Citi’s Control Functions establish the second line of defense to enhance the effectiveness of controls across products, business lines and regions. Finance, Global Compliance, Human Resources, Legal, Risk, Finance & Risk Infrastructure, all own policies or processes that affect Citi’s control. Oversight is also established in respective functions to ensure controls are in place across all regions/countries.

Third Line of Defense: Internal Audit, in accordance with their charter, provides independent assessment and evaluation of the control environment. The Bank has also assessed ICC Risk in accordance with guidelines issued by Bangladesh Bank and found those to be in line with the aforesaid framework being used at the Bank.

3.23.6 Information technology risk The Bank has an in-house IT department for the support and services of IT systems locally,

backed by a global IT support team to manage core group-wide IT systems and processes. The Business Continuity Plan (BCP) is formulated to cover various operational risks including IT risk and consists of a recovery plan (i.e. backup and recovery process).

3.23.7 Audit committee According to BRPD Circular No. 12 (23 December 2002), all banks are advised to constitute

an audit committee comprising of member of the board. The audit committee will assist the board in fulfilling its oversight responsibilities including implementation of the objectives, strategies and overall business plan set by board for the effective functioning of the Bank. The committee will review the financial reporting process, the system of internal control and management of the financial risk, the audit process and the Bank’s process for monitoring compliance with laws and regulations and its own code of business conduct.

The Bank, being a foreign bank, does not have a local board of directors from whom to select an Audit Committee but there is a Business Risk, Compliance and Control Committee (BRCC) where all risk issues are discussed, action points set to mitigate risks identified and documented. However, the Bank obtained formal dispensation from the Banking Regulation and Policy Department of Bangladesh Bank as regards to the formation of the committee as suggested in the BRPD Circular No 12 dated 23 December 2002.

3.24 Changes in accounting policies The Bank has consistently applied the accounting policies as set out in Note 3 to all

periods presented in these financial statements. The various amendments to standards, including any consequential amendments to other standards, with the date of initial application of 1 January 2017 have been considered. However, these amendments have no material impact on the financial statements of the Bank.

In December 2017, ICAB has decided to adopt IFRS replacing BFRS effective for annual periods beginning on or after 1 January 2018. However, since currently issued BFRS have been adopted from IFRS without any major modification, such changes would not have any material impact on financial statements. A number of standards and amendments to standards are effective for annual periods beginning after 1 January 2017 and earlier application is permitted. However, the Bank has not early applied the following new standards in preparing these financial statements.

(a) BFRS 9 Financial Instruments (to be adopted as IFRS 9) BFRS 9, published in July 2014, replaces the existing guidance in BAS 39 Financial

Instruments: Recognition and Measurement. BFRS 9 includes revised guidance on the classification and measurement of the financial instruments, a new expected credit loss model for calculating impairment of financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from BAS 39. BFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. As per the Bank's assessment, any material impact of BFRS 9 would be primarily on calculation of impairment provision. However, as Bangladesh Bank has not issued any circular to revise its current impairment, classification and measurement policies to align with BFRS 9 the Bank is unable to quantify any potential impact on its financial statements.

(b) BFRS 15 Revenue from Contracts with Customers (to be adopted as IFRS 15) BFRS 15 establishes a comprehensive framework for determining whether, how much

and when revenue is recognised. It replaces existing recognition guidance, including BAS 18 Revenue, BAS 11 Construction Contracts and BFRI 13 Customer Loyalty Programmes. BFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. Based on preliminary assessment the Bank has determined that BFRS 15 has no material impact on its financial statements.

(c) IFRS 16 Leases IFRS 16, issued in January 2016 replaces existing leases guidance and effective for

reporting period beginning on or after 1 January 2019. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The Bank has not yet assessed any potential impact of IFRS 16 on its financial statements.

(d) IFRS 17 Insurance Contracts IFRS 17 was issued in May 2017 and applies to annual reporting periods beginning on or

after 1 January 2021. IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. The Bank has not yet assessed in potential impact of IFRS 17 on its financial statements.

There are no other standards that are not yet effective and that would be expected to have a material impact on the Bank in the current or future reporting periods and on foreseeable future transactions.

3.25 Offsetting Financial assets and liabilities are offset and the net amount presented in the balance sheet

when, and only when, the Bank has a legal right to set off the recognised amounts and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under BFRSs, or for gains and losses arising from a group of similar transactions such as in the Bank’s trading activity.

Daily 6% (2016: 6%) of average demandand time liabilities:

Required reserveActual reserve held

Surplus

Bi-weekly 6.5% (2016: 6.5%) of averagedemand and time liabilities:

Required reserveActual reserve held (Annexure- H)

Surplus

1,576,096,899 1,999,433,371

423,336,472

1,707,438,307 2,131,102,104

423,663,797

1,681,922,560 4,142,202,588

2,460,280,028

1,822,082,770 3,004,193,079

1,182,110,309

13% (2016: 13%) of Average demand and time liabilities:

Required reserve 3,414,876,614 3,644,165,550 Actual reserve held with Bangladesh Bank 8,767,067,901 11,353,037,193 Surplus 5,352,191,287 7,708,871,643 4.2.3 Actual reserve held for Statutory Liquidity Reserve Cash in hand 108,100,289 192,197,277 Surplus balance with Bangladesh Bank for SLR 291,995,061 2,320,119,818 Balance with agent bank (Sonali Bank Ltd.) as per statement - - Government treasury bills 1,744,676,661 1,682,629,779 Government treasury bonds 6,622,277,390 6,258,004,568 Bangladesh Bank Bill - 899,646,851 Prize bond 18,500 438,900 Reverse Repo - - 8,767,067,901 11,353,037,193 5 Balance with other banks and financial institutions

Inside Bangladesh (Note 5.1) 741,694,945 809,798,507 Outside Bangladesh (Note 5.2) 3,447,018,449 8,750,654,253 4,188,713,394 9,560,452,7605.1 Inside Bangladesh Current account: AB Bank Ltd. 1,284,085 65,074,108 Agrani Bank Ltd. 4,615,293 5,285,548 IFIC Bank Ltd. 50,345,364 247,629,012 Prime Bank Ltd. 111,047,802 194,623,260 Sonali Bank Ltd. 38,779,116 92,168,133 Southeast Bank Ltd. 258,760,379 179,437,288 464,832,039 784,217,349 Short notice deposit (SND): Sonali Bank Ltd. 26,862,906 25,581,158 Time placement: Pubali Bank Ltd. 250,000,000 - 741,694,945 809,798,507 5.2 Outside Bangladesh Interest bearing account: Citibank, Australia (AUD) 358,778 596,950 Citibank, Canada (CAD) 255,760 515,987 Citibank, Hong Kong (HKD) 46,634 44,706 Citibank, Karachi (USD) 17,481,207 16,719,747 Citibank, London (CHF) 444,887 183,136 Citibank, London (GBP) 5,102,521 105,870,903 Citibank, London (EUR) 67,300,100 114,202,830 Citibank, London (DKK) 57,390 34,579 Citibank, London (SEK) 69,741 59,920 Citibank, Mumbai (USD) 149,614,046 130,300,359 Citibank, New York (USD) 1,148,573,072 8,368,394,000 Citibank, Norway (NOK) 28,607 35,641 Citibank, Singapore (SGD) 158,210 406,659 Citibank, Sri Lanka (USD) 4,076,120 3,917,683 Citibank, Tokyo (JPY) 2,491,376 9,371,154

Time placement Citibank, Singapore (USD) 2,050,960,000 - 3,447,018,449 8,750,654,253 Details are shown in Annexure C. 5.3 Maturity grouping of balance with other banks and financial institutions Repayable on demand 1,887,753,394 9,560,452,760 Not more than one months 580,800,000 - Over one month but not more than three months 1,720,160,000 - Over three months but not more than one year - - Over one year but not more than five years - - Over five years - - 4,188,713,394 9,560,452,760

of 11Citibank, N.A.




2017Taka

2016Taka

In hand: Local currency

Foreign currencies

Balance with Bangladesh Bank: Local currency

Foreign currencies

Balance with Sonali Bank Limited (as agent of Bangladesh Bank): Local currency

97,100,028 11,000,261

108,100,289

2,018,026,823 4,986,556,047 7,004,582,870

- 7,112,683,159

188,966,014 3,231,263

192,197,277

4,152,546,880 5,003,807,907 9,156,354,787

- 9,348,552,064

In bank: AB Bank LtdEastern Bank Ltd

Investment Corporation of Bangladesh(ICB)

InvestmentsGovernment securitiesReverse Repo with Bangladesh BankOther

Treasury billsNational investment bondBangladesh Bank billsBangladesh Bank treasury bondsGovernment notes/bondPrize bondsOthers

7

7.1

- - -

-

-

8,365,494,964 -

6,000,000 8,371,494,964

1,745,160,504 - -

6,620,315,960 -

18,500 -

8,365,494,964

220,000,000 400,000,000 620,000,000

900,000,000

1,520,000,000

8,839,605,995 -

6,000,000 8,845,605,995

1,682,935,760 -

899,783,867 6,256,447,468

- 438,900

- 8,839,605,995

In non banking financial institutions (public and private):

Government securities

1,396,058,449 8,750,654,253

2017

Taka

2016

Taka10.2 Others Foreign exchange revaluation 8,329,742 9,651,235

Deferred tax assets (Note 14.4.2) 225,808,402 183,497,428 Clearing and collection items 973,108,275 588,575,936 Overdrawn on deposit account 7,800 22,494 Export bill negotiation - - Accounts Receivable 37,637,800 22,943,682 Asset retirement obligation 3,856,870 5,401,292 Net surplus assets of defined benefit scheme (Note 14.5.6) - - 1,248,748,889 810,092,067

10.3 Maturity grouping of other assets

On demand 973,108,275 598,227,171 Not more than one month 96,456,862 54,923,661 Over one month but not more than three months 36,035,102 11,462,401 Over three months but not more than one year 117,659,311 125,183,127 Over one year but not more than five years 262,954,413 452,676,262 Over five years 232,784,551 54,899,756

1,718,998,514 1,297,372,378



2017Taka

2016Taka

i) Loans considered good in respect of which the banking company is fully secured (unclassified loans and advances); 16,121,181,087 8,734,564,559 ii)Loans considered good against which the banking company holds no security other than the debtor's personal guarantee; - -

Dhaka Division

Chittagong Division

8.7 Classification of loans and advances

Unclassified:

Standard

Special mentionaccount

Classified:

Substandard

Doubtful

Bad/loss

15,837,174,056

504,347,222

16,341,521,278

16,121,181,087

-

16,121,181,087

-

-

220,340,191

220,340,191

16,341,521,278

96.91%

3.09%

100%

98.65%

0.00%

98.65%

0.00%

0.00%

1.35%

1.35%

100.00%

8,943,042,250

11,810,000

8,954,852,250

8,734,564,559

-

8,734,564,559

-

-

220,287,691

220,287,691

8,954,852,250

99.87%

0.13%

100%

97.54%

0.00%

97.54%

0.00%

0.00%

2.46%

2.46%

100.00%

% Taka

2016

% Taka

2017

8.8 Particulars of loans and advances

iii) Loans considered good secured by the personal undertakings of one or more parties in addition to the personal guarantee of the debtor; - -

iv) Loans adversely classified; provision not maintained there against; - -

v) Loans due by directors or officers of the banking company or any of these either separately or jointly with any other persons; - 231,800,778 vi) Loans due from companies or firms in which the directors of the banking company have interests as directors, partners or managing agents or in case of private companies as members; - -

vii) Maximum total amount of advance including temporary advance made at any time during the year to directors or managers or officers of the banking companies or any of them either separately or jointly with any other person; - 231,800,778 viii) Maximum total amount of advances, including temporary advances granted during the year to the companies or firms in which the directors of the banking company have interest as directors, partners or managing agents or in case of private companies as members; - -

ix) Due from banking companies - -

x) Classified loans for which interest has not been charged:

a) Increase/(Decrease) of provision (specific) 52,500 43,500 Amount of loans written off - - Amount realised against the loan previously written off - -

b) Provision against the loan classified as bad/loss at the date of balance sheet 162,113,674 162,061,174 (c) Amount of interest charged in suspense account 58,226,517 58,226,517

2017Taka

2016Taka

2017Taka

2016Taka

xi) Loans written off: Current year - - Cumulative to-date - - The amount of written off loans for which lawsuit filed - -

8.10 Bills purchased and discounted Bills purchased and discounted excluding treasury bills:

Inside Bangladesh 89,519,875 150,689,014 Outside Bangladesh - -

89,519,875 150,689,014

8.11 Maturity wise bills purchased and discounted

Payable within one month 61,165,978 15,966,867 Payable over one month but within three months 22,845,380 58,695,352 Payable over three months but within six months 5,508,517 76,026,795 Payable over six months - - 89,519,875 150,689,014

9 Fixed assets including premises, furniture and fixtures Premises used by the bank - - Vehicles 30,365,526 30,365,526 Furniture and fixtures 282,938,318 286,059,850 Office equipment 239,895,287 277,041,389

553,199,131 593,466,765

8.9 Particulars of required provision for loans and advances

84,397,993

252,230

-

--

4,846,833

-

89,497,056

-

-

-

251,558,230

294,324,624

159,074,779

-

-

--

2,137,032

-

161,211,811

-

-

-

162,113,674

162,113,674

162,061,174

162,061,174

323,325,485

355,409,772

32,084,287 42,766,394

For loans and advancesUnclassified-general provisionAll unclassified loans (other thansmall enterprises, housingfinance, loan to MBs loans forprofessional, consumer financingand special mention account)Small and medium enterprisefinancing

Loan to BHs/MBs/SDs againstshares

Housing and loan for professionalConsumer financeAgriculture finance

Special Mention Account (SMA)

Required general provisionClassified - specific provision

Sub-standard and doubtful

agricultural loans

Sub-standard

Doubtful

Bad/loss

Required specific provision

Required provision for loans and advances

Total provision maintained

Excess provision as at 31 December

Required provision

Taka

1.00%

0.25%

2.00%

2.00%5.00%1.00%

1.00%

5.00%

20.00%

50.00%

100.00%

% of required provision

Required provision

Taka

15,907,477,893

-

-

--

213,703,194

-

-

-

-

162,113,674

Base for provision

Taka

2017 2016

15,907,477,893

-

-

--

213,703,194

-

-

-

-

220,340,191

Outstanding as at

31 Dec 2017

Taka

Status

Less: Accumulated depreciation Vehicles 30,365,521 30,365,521 Furniture and fixtures 177,821,137 149,426,815 Office equipment 166,729,701 195,539,067

374,916,359 375,331,403

For details refer to Annexure F. 178,282,772 218,135,362

10 Other asset a) Income generating other assets - - b) Non-income generating other assets: i) Investments in shares of subsidiary companies - - ii) Stationery, stamps, printing materials in stock 1,513,630 690,756 iii) Advance rent and advertisement 241,471,267 289,283,925 iv) Interest accrued on investment but not collected, 203,162,559 178,972,615 v) Commission and brokerage receivable on shares and debentures - - vi) Other income receivables 2,311,566 - vii)Security deposits 3,116,797 2,831,797 viii) Preliminary, formation and organisational expenses, renovation, development and prepaid expenses - - ix) Branch adjustment (Note 10.1) - - x) Suspense 2,482 489,361 xi) Silver - - xii) Other Prepaid Expenses 18,671,324 15,011,857 xiii) Others (Note 10.2) 1,248,748,889 810,092,067

1,718,998,514 1,297,372,378

10.1 Branch adjustment General accounts debit - - General accounts credit - -

- - Branch adjustments account represents outstanding interbranch and head office

transactions (net) originated but yet to be responded at balance sheet date. The unrespondent entries as at 31 December 2017 are given below:

Up to three months - - - -Over three months but - - - -within six months Over six months but - - - -within one year Over one year but within - - - -five years - - - -

Debit Credit

No. of

unrespondent entries

Debit Debit

Unrespondent

entries (Taka)

11 Non banking assets a) Income generating assets - - b) Non-income generating assets - - - -

12 Borrowings from other banks, financial institutions and agents Inside Bangladesh (Note 12.1) 64,580,456 452,122,084 Outside Bangladesh (Note-12.2) - - 64,580,456 452,122,084 12.1 Inside Bangladesh Secured Repayable on demand - - Others - call borrowings - - Collateralised repo with Bangladesh Bank (under ALS programme) - - Others borrowings - - EDF (Export Development Fund) from Bangladesh Bank 64,580,456 452,122,084 Unsecured - - 64,580,456 452,122,084 12.2 Outside Bangladesh Secured Others borrowings Citibank, Singapore - - Unsecured - - - -

10.4 Particulars of required provision for other asset:

Particulars

Nil - - - -

Base for

Provision

Taka

Rate (%)

Taka

2017 2016

Provision

Taka

Provision

Taka

2017

Taka

2016

Taka

12.3 Maturity wise grouping of borrowings from other banks, financial institutions and agents On demand - - Within one month 960,097 18,330,152 Over one month but within three months 38,297,628 219,820,173 Over three months but within one year 25,322,731 213,971,759 Over one year but within five years - - Over five years - - 64,580,456 452,122,084 13 Deposits and other accounts Current account and other accounts, etc. Current account 10,275,286,604 14,329,938,576 Short notice deposits 6,745,878,537 9,609,419,645 Sundry deposits (Note 13.5) 2,820,087,751 1,611,206,927 19,841,252,892 25,550,565,148

Bills payable (Note 13.4) 1,482,787,324 1,870,116,007 Savings deposits 438,420,098 289,677,290

Fixed deposits Repayable On demand - - Repayable within one month 1,424,800,000 55,062,000 Over one month but within six months 2,452,928,096 169,598,346 Over six months but within one year - 31,000,000 Over one year but within five years - -

Over five years but within ten years - - 3,877,728,096 255,660,346

25,640,188,410 27,966,018,791

13.1 Classification of deposits from banks and others

Inter-bank deposits (Note 13.1.1) 1,380,516,189 576,430,802

Other deposits 24,259,672,221 27,389,587,989

13.1.1 Inter bank deposits Inside Bangladesh AB Bank Limited 133,769 -

133,769 - Outside Bangladesh

Citibank Europe Plc. 129,787,897 108,167,210 Citibank, New York Foreign Exchange 11,908,566 15,007,470 Citibank, Mumbai 265,693,548 145,943,059 Citibank, Colombo 48,586,738 20,497,147 Citibank, London 5,858,928 17,363,411 Citibank, Japan Ltd. 74,090 74,090 Citibank, Berhad 3,332,023 959,490 Citibank, Bangladesh Offshore Banking unit 915,140,630 268,418,925

1,380,382,420 576,430,802

1,380,382,420 576,430,802

13.2 Unclaimed deposits for 10 years or more Payment order 1,429,849 1,008,983

1,429,849 1,008,983

13.3 Maturity wise grouping of deposits and other accounts (based on remaining maturity)

Deposit

from inter banks

Taka

Deposits

from others

Taka

2017

Total

Taka

Total

Taka

2016

13.4 Bills payable Inside Bangladesh 1,482,787,324 1,870,116,007 Outside Bangladesh - - 1,482,787,324 1,870,116,00713.5 Sundry deposits Deposit of Retention Quota for Exporters (ERQ) 749,679,402 334,638,446 Margin Deposits 259,594,088 474,016,922 Vostro Accounts 1,380,516,189 576,430,802 Special Foreign Currency Accounts 37,628,914 22,441,844 Others 392,669,158 203,678,913

2,820,087,751 1,611,206,927

14 Other liabilities

Provision for loans and advances (Note 14.1) 355,409,772 294,324,624 Provision for off balance sheet exposures (Note 14.2) 207,030,518 215,437,191 Provision for balances with other banks (Nostro accounts) - - Interest suspense account(Note 14.3) 58,226,517 58,226,517 Provision for taxation (Note 14.4) 528,985,611 470,039,385 Liability for tax, VAT and excise duty deducted at source 37,430,721 23,433,313 Foreign exchange revaluation loss 11,823,791 1,194,573 Interest payable 11,436,435 1,391,253 Accounts payable 720,395,592 730,016,851 Provision for expenses 141,524,538 109,236,478 Unearned income 8,632,846 12,803,803 Bonus payable 42,195,470 41,751,809 Asset retirement obligation 8,141,245 8,141,245 Rent equalization reserve 85,853,677 85,543.608 Net deficit of defined benefit scheme (Note 14.5.6) 69,283,505 84,499,650 2,286,370,238 2,136,040,300 14.1 Provision for loans and advances Movement in General Provision for unclassified loans and advances Balance as at 1 January 132,263,450 118,389,343 Add: Provision made during the year: On general loans and advances 61,032,648 13,874,107 On Special Mention Account - - 61,032,648 13,874,107

193,296,098 132,263,450 Less: Provision no longer required - - Balance as at 31 December 193,296,098 132,263,450 Movement in Specific Provision for classified loans Balance as at 1 January 162,061,174 162,017,674 Add: Recoveries of amounts previously written off - - Specific provision made during the year for other accounts 52,500 43,500

162,113,674 162,061,174 Less: Fully provided debt written off - - Recoveries and provisions no longer required - - Net charge to profit and loss account - - - -

Balance as at 31 December 162,113,674 162,017,674 Total provision on loans and advances 355,409,772 294,324,624

14.2 Provision for off balance sheet exposures Balance as at 1 January 215,437,191 203,060,114 Add: Provision made during the year - 12,377,077 215,437,191 215,437,191 Less: Provision no longer required (8,406,673) - Balance as at 31 December 207,030,518 215,437,191

14.3 Interest suspense account Balance as at 1 January 58,226,517 58,226,517 Add: Amount transferred to "interest suspense" account during the year - - 58,226,517 58,226,517

Less: Amount of interest suspense recovered - - Amount written off during the year - - Interest waiver during the year - -

- -

Balance as at 31 December 58,226,517 58,226,517

14.4 Provision for taxation Current tax (Note 14.4.1) 528,444,568 460,279,926 Deferred tax liability (Note 14.4.2) 541,043 9,759,459 528,985,611 470,039,38514.4.1 Provision for current tax Provision Balance as at 1 January 460,279,926 448,595,266 Provision made during the year 558,937,780 440,600,509

1,019,217,706 889,195,775 Adjustments made during the year (490,773,138) (428,915,849)

Balance as at 31 December 528,444,568 460,279,926

Provision for current tax of has been made at 42.5% as prescribed by The Finance Act 2016 of

the accounting profit made by the Bank after considering some of the add backs to income and disallowances of expenditure as per Income Tax Ordinance and Rules 1984 and incompliance with paragraph 46 of BAS 12: Income Tax.

The tax authorities have audited the Bank’s tax returns for accounting years 2009, 2010, 2011, 2012 and 2013 whereby they have demanded an additional amount of tax. The Bank has challenged this demand as it believes the tax authority’s position is unjustified.

14.4.2 Provision for deferred tax Deferred tax asset Balance as at 1 January 183,497,428 140,091,830 Add: Provision made during the year 42,310,974 43,405,598 225,808,402 183,497,428 Less: Adjustment made during the year - - Balance as at 31 December 225,808,402 183,497,428 Deferred tax liability Balance as at 1 January 9,759,459 19,943,239 Add: Provision made during the year - -

9,759,459 19,943,239 Less: Adjustment made during the year for revaluation reserve (9,218,416) 10,183,780 Balance as at 31 December 541,043 9,759,459

14.5 Total expense recognised in the profit and loss account in employee benefits relating to the defined benefit plan Current service cost 41,898,077 33,632,893

Interest cost 4,721,985 1,524,801 Expected returns on plan assets - - Past service cost - - Contribution to the defined benefit plan 46,620,062 35,157,694 14.5.1 Net asset/(liability) recognised on the balance sheet in respect of the defined benefit plan Citibank, N.A. Bangladesh Branches Employees Gratuity Fund (69,283,505) (84,499,650) 14.5.2 Post-employment defined benefit plans' principal actuarial financial assumptions

Rate of return on investments 6.75% 6.50% Rate of increase in pay 10.00% 10.00%

14.5.3 Defined benefit plans

The calculation of the net liability under the Bank's defined benefit plan is set out below together with the expected rates of return and plan assets used to measure the net defined benefit plan cost in each subsequent year.

Citibank, N.A.




of 11

8.3 Analysis of significant concentration of loans and advances including bills purchased and discounted

Advances to allied concerns of Directors - - Advance to chief executive and other senior executives: Citi Country Officer - 35,335,876 Other senior executives and staff of the Bank - 196,464,902 - 231,800,778 Advances to customers' group (Note 8.4) 11,601,003,427 5,910,491,714 Industry wise (Note 8.5) 16,341,521,278 8,954,852,250 Geographical location wise (Note 8.6) 16,341,521,278 8,954,852,250 8.4 Number of clients with amount of outstanding and classified loans to whom loans and advances sanctioned more than 10% of total capital of the Bank Number of the clients 16 16 Amount of outstanding advances 11,601,003,427 5,910,491,714 Details are mentioned in the Annexure E 8.5 Particulars of loans and advances - Industry wise Agriculture (Dairy, Poultry, Nursery, Hatchery etc) 213,703,194 193,873,333 Readymade Garments 676,933,177 1,077,793,053 Pharmaceutical Industries 1,286,804,683 490,530,960 Chemical Industries 1,116,228,237 342,494,641 Fuel & Electricity 2,482,987,184 413,324,687 Agro based Industries 3,460,700,719 1,698,328,088 IT Sector 10,641,969 789,451,986 Telecommunication 1,410,732,340 1,363,761,924 Financial Corporation 2,213,917,974 1,721,224,226 Others 3,468,871,801 864,069,352 16,341,521,278 8,954,852,250

8.6 Particulars of loans and advances - geographical location wise

Repayable on demandRepayable within one monthRepayable over one month but within six monthsRepayable over six months but within one yearRepayable over one year but within five yearsRepayable over five years but within ten years

1,380,516,189 -

-

-

-

- 1,380,516,189

168,461,455 1,891,305,881

3,430,368,990

4,484,229,517

14,285,306,378

- 24,259,672,221

1,548,977,644 1,891,305,881

3,430,368,990

4,484,229,517

14,285,306,378

-

25,640,188,410

2,027,939,421 669,391,990

1,159,062,079

3,633,765,415

20,475,859,886

-

27,966,018,791

2017 2016Taka Taka

2017Taka

2016Taka

25,640,188,410 27,966,018,791



2017Taka

2016Taka

15.2 Fund deposited with Bangladesh Bank as capital The make-up of paid up capital is as follows:

Capital maintained in FCY (USD 57,698,043.95) 4,771,628,235 4,540,836,059 - -

4,771,628,235 4,540,836,059

16 Other reserve Revaluation reserve on HTM securities Balance as at 1 January - - Addition to revaluation reserve - - - - Adjustment from revaluation reserve - - - - Deferred tax liabilities - - Balance as at 31 December - -

Revaluation reserve on HFT securities Balance as at 1 January 13,203,975 26,982,029 Addition to revaluation reserve 732,000 13,203,975

13,935,975 40,186,004 Adjustment from revaluation reserve (13,203,975) (26,982,029)

Balance as at 31 December 732,000 13,203,975 Actuarial gain/(loss) (112,143,880) (112,722,984)

Balance as at 31 December (111,411,880) (99,519,009)

17 Profit and loss account Balance as at 1 January 4,749,472,584 5,079,455,174 Currency translation difference - - 4,749,472,584 5,079,455,174 Withdrawal of lien of Capital - - Retained surplus for the year 510,866,038 444,278,170 Profit Remittance - (774,260,760)

Balance as at 31 December 5,260,338,622 4,749,472,584 18 Contingent liabilities 18.1 Acceptances and endorsements Acceptance under letters of credit -Import 4,351,373,617 3,090,423,611 Acceptance under letters of credit -Export - - 4,351,373,617 3,090,423,611 18.2 Letters of guarantee Letters of guarantee (Local) 128,016,566 254,162,937 Letters of guarantee (Foreign) 2,026,161,538 2,048,428,397

2,154,178,104 2,302,591,334 Balance for which the Bank is contingently liable in respect of guarantee issued favouring: Government 1,965,523,303 2,064,880,517 Banks and other financial institutions 927,000 887,000 Others 187,727,801 236,823,817

2,154,178,104 2,302,591,334

18.3 Irrevocable letters of credit Back to back L/C 560,312,735 493,720,017 Others 7,074,102,646 8,156,178,937

7,634,415,381 8,649,898,95418.4 Bills for collection Bills for collection (Local) - - Bills for collection (Foreign) - - - - Bills for collection sent/received by the Bank on behalf of its customers are without any recourse to the

Bank in case of any potential default or non payment . Accordingly, as per the stated accounting policy on contingent liabilities (note 3.11.1) such bills for collection are not included as contingent liabilities of the Bank.

18.5 Other commitments Documentary credits and short term trade related transactions 561,081,399 113,808,231 Forward assets purchased and forward deposits placed 3,873,894,767 5,070,545,836 Undrawn formal standby facilities, credit lines and - 1,066,600,000 commitments to lend Spot exchange rate contracts - - Forward exchange rate contracts - - Other exchange rate contracts - -

4,434,976,166 6,250,954,06718.6 Others Value of travelers' cheques on hand - - Value of Bangladesh Sanchaypatra on hand 181,925,000 235,925,000 Value of Bangladesh Bank USD bond on hand 219,196,350 208,594,350 Value of unprocessed cheques - -

401,121,350 444,519,35019 Income statement Income: Interest, discount and similar income 783,469,352 718,068,572 Dividend income 7,500,000 7,500,000 Fees, commission and brokerage 260,619,276 240,973,503 Gains less losses arising from dealing securities 412,061,437 464,957,144 Gains less losses arising from investment securities - - Gains less losses arising from dealing in foreign currencies 729,871,806 488,898,303 Income from non-banking assets - - Other operating income 3,770,664 360,109 Profit less losses on interest rate changes - -

2,197,303,862 1,920,757,631 Expenses: Interest, fees and commission 92,161,126 52,637,686 Losses on loans and advances - - Administrative expenses 753,401,334 714,326,732 Other operating expenses 180,040,051 182,204,439 Depreciation on banking assets 58,390,448 62,817,154

1,083,992,959 1,011,986,011

Income over expenditure 1,113,310,902 908,771,620

2017Taka

2016Taka

2017

Taka

2016

Taka

20 Interest income Interest on loans and advances 652,403,462 598,642,300 Interest on placement with other banks and financial institutions 28,122,968 60,751,250 Interest on Reverse Repo - - Interest on balances with other banks and financial institutions 1,518,116 4,651,755 Interest on foreign currency balances 101,424,806 54,023,267

783,469,352 718,068,57221 Interest paid on deposits and borrowings Interest on deposits 65,857,820 37,173,308 Interest on borrowings 26,303,306 15,464,378 Interest on Repurchase agreement (repo) - - Interest on foreign bank accounts - -

92,161,126 52,637,68622 Income from investments Interest income from government securities (Note 22.1) 626,393,304 562,209,567 Capital Gain/( loss) on government securities (Note 22.2) 4,867,421 81,245,846 Revaluation gain/(loss) on government securities (Note 22.3) (219,199,288) (178,498,269) Dividend on investment in shares 7,500,000 7,500,000 Gain on sale of investment in shares -

419,561,437 472,457,144

22.1 Interest income from government securities Interest income on treasury bills & Bangladesh Bank Bills 109,659,909 180,928,875 Interest income on treasury bonds 516,733,395 381,280,692

626,393,304 562,209,567

22.2 Capital Gain/( loss) on government securities Capital gain on treasury bill - - Capital gain on treasury bonds 5,023,070 84,356,246

5,023,070 84,356,246 Capital loss on treasury bill - - Capital loss on treasury bonds (155,649) (3,110,400)

(155,649) (3,110,400)

4,867,421 81,245,846

22.3 Revaluation gain/(loss) on government securities Revaluation gain on treasury bill - - Revaluation gain on treasury bonds - - - - Revaluation loss on treasury bill (119,697) - Revaluation loss on treasury bonds (219,079,591) (178,498,269)

(219,199,288) (178,498,269)

(219,199,288) (178,498,269)23 Commission, exchange and brokerage Commission income: L/C commission 166,355,019 161,575,790 Collection 21,695,057 20,687,767 Transfer 11,301,628 9,260,297 Service charge 3,235,986 4,613,208 Guarantee 6,857,624 5,578,433 Syndication - - Arrangement fee - - Agency Fees 832,611 4,662,000 Others 50,341,351 34,596,008

260,619,276 240,973,503 Exchange income: Net profit from foreign currency dealings 729,883,133 488,898,303

990,502,409 729,871,80624 Other operating income Gain/(loss) on sale of fixed assets 390,657 360,109 Miscellaneous income/(expense) 3,380,007 -

3,770,664 360,109

25 Salaries and allowances Salaries and allowances 413,963,093 392,987,673 Provident fund contribution 23,932,803 24,853,712 Gratuity 46,620,062 35,157,694 Bonus Current year expense 42,340,700 55,539,135 Adjustment related to prior year expense (997,664) (11,332,456)

41,343,036 44,206,679 Total salaries, bonus and allowances 525,858,994 497,205,758 Less: Citi Country Officer's (CCO) salary and allowances 53,822,532 47,460,549 Total salaries, bonus and allowances excluding CCO's salaries and allowances 472,036,462 449,745,209

26 Depreciation and repairs of bank's assets Depreciation on fixed assets (Annexure F) 58,390,448 62,817,154 Repairs and maintenance 12,448,368 17,472,258

70,838,816 80,289,412

27 Other expenses Charitable expenses 1,261,514 400,000 Contribution non-charitable - 63,250 Entertainment expenses 56,923 135,843 Fuel and maintenance of vehicles 5,864,711 5,135,190 Membership entrance fee 6,305,450 715,635 Outsourced/contract staff costs 53,265,894 66,739,043 Professional fees 5,317,432 1,402,305 Seminar 10,489,063 6,496,733 Service charge - other bank 56,072,782 50,403,930 Sponsorship, meeting and events 8,995,825 7,467,058 Training 5,000,123 4,663,161 Travelling expenses 3,720,636 117,982 IT expenses 753,862 13,619,350 Sundry expenses 10,487,468 7,372,701

167,591,683 164,732,18128 Tax expense Current tax expenses: Current year 592,077,363 481,644,399 Adjustments for prior years - - 592,077,363 481,644,399 Deferred tax (income)/expenses (42,310,974) (43,405,598)

549,766,389 438,238,801

30 Cash and cash equivalent

Cash in hand (including foreign currencies) 108,100,289 192,197,277 Balance with Bangladesh Bank and its agent bank (including foreign currencies) 7,004,582,870 9,156,354,787 Balance with other banks and financial institutions 4,188,713,394 9,560,452,760 Money at call and short notice - 1,520,000,000 91 days treasury bills 1,745,160,504 - Reverse Repo - - Bangladesh Bank bill - 899,783,867

Prize bond 18,500 438,900

Capital adequacy ratio:

Capital to Risk Weighted Assets Ratio (CRAR)Common Equity Tier-1 to RWA

39.32%37.76%

43.08%41.46%

Operating Leases As of reporting date, the bank is not obliged under any non-cancellable lease

Contingencies

There are no material contingent liabilities at the year end, other than those disclosed as "Off Balance Sheet Items" in the balance sheet and detailed in notes below. Claim against the bank not acknowledged as loan for which the bank is contingently liable in respect of guarantees issued favouring:

Related party transaction

Transactions with key management personnel The key management personnel of the Bank for the purposes of BAS 24 are defined as those persons having authority and responsibility for planning, directing and controlling the Bank, being members of the Board of Directors of the Group, Group Managing Directors, and close members of their families and companies they control, or significantly influence, or for which significant voting power is held.

Citibank N.A. Bangladesh Branches, not being incorporated locally, operate in Bangladesh under the Banking license issued by Bangladesh Bank and therefore for this Bank the key management personnel, who do qualify as related party under BAS 24, refer to Citibank officials located outside Bangladesh. There were no transactions between the Bank and the key management personnel of the Bank in 2017 (2016 - nil). Transactions with other related parties

Transactions with Citigroup Global Markets Limited (New York) Citigroup Global Markets Limited (hereinafter called CGML New York) is a subsidiary of Citigroup Inc. which is also the parent company of Citibank N.A. CGML New York operates the below mentioned accounts in respect of portfolio investment in Bangladesh. The disclosure of the year end balance is considered to be the most meaningful information to represent transactions during the year. These transactions arose in the ordinary course of business and are on substantially the same terms, including interest rates and security, as for comparable transactions with third party counterparties. The following balances were outstanding as at 31 December:

Transactions with the Offshore Banking Unit

The Bank provides certain banking and financial services and administrative services to the Offshore Banking Unit (OBU) of Citibank, N.A. operating in Bangladesh under the banking license issued by Bangladesh Bank. As at year end receivables from OBU were nil (disclosed in Note 10.2) and deposits from OBU were BDT 915,140,630 (disclosed in Note 13.1.1). The disclosure of the year end balance is considered to be the most meaningful information to represent transactions during the year. These transactions arose in the ordinary course of business and are on substantially the same terms, including interest rates and security, as for comparable transactions with third party counterparties.

All directly attributable operating expenses are allocated from Onshore Branches to OBU based on usage of the floor space on monthly basis. Also product and sales team expense is allocated based on contribution to total revenue earned. The ratio used for monthly expense allocation is reviewed annually. At every quarter, funds are transferred from OBU to Onshore branches for payment of advance tax. Transactions with Vostro Accounts Some branches of Citibank maintains vostro accounts with Citibank Bangladesh for interbranch transaction settlement. The disclosure of the year end balance is considered to be the most meaningful information to represent transactions during the year. As at year end the balance with all vostro accounts (including other branches of Citibank) are given in the Annexure J. Transactions with Nostro Accounts Citibank Bangladesh maintains nostro accounts with only other Citibank branches. The disclosure of the year end balance is considered to be the most meaningful information to represent transactions during the year. As at year end the balance with all nostro accounts are given in the Annexure C. Transactions with overseas affiliates "Citibank Bangladesh provides trade related processing support services for transactions of Citibank Hong Kong and Citibank Singapore. Fee earned from such services in 2017 amounted to Tk. 182,862 (2016: Tk. 294,955) from Citi Hong Kong and Tk. 2,646,343 (2016: Tk. 2,687,735) from Citi Singapore, both of which are included in the fee revenue disclosed in the profit and loss account. These transactions arose in the ordinary course of business and are on substantially the same terms as for comparable transactions with third party counterparties. In the normal course of banking business, Citi enters into foreign exchange transactions with its affiliates to hedge its foreign exchange exposures. The transactions are done at market rates and are conducted on arm’s length basis."

Transactions with post employment benefit plans The Bank has two post employment benefit schemes, the nature of which is disclosed in Note 3.14, Post employment benefits. The amount payable to these schemes or due from these schemes to the Bank as at 31 December 2017 is disclosed in Note 10 & Note 14. The total contribution to these schemes in 2017 by the Bank is disclosed in Note 14.5.5.The responsibility for fund management and administration of these schemes rest with the Trustee's of these schemes, however, these functions are delegated to the Bank's Human Resources Department. The Bank does not charge these schemes any fees for the day to day fund management or administrative services.As at 31 December 2017 the provident fund has placed deposit of Tk. 19,747,433 (2016: Tk. 45,776,953 ) and the gratuity fund had placed deposits of Tk. 108,187,064 (2016: Tk. 100,975,813) with the Bank.Interest expense incurred by the Bank on deposits placed by the provident fund in 2017 amounted to Tk. 111,982 (2016: Tk. 188,425) and on deposit placed by gratuity fund in 2017 amounted to Tk. 419,493 (2016: Tk. 439,564), both of which are included in the interest expense disclosed in the profit and loss account. These transactions arose in the ordinary course of business and are on substantially the same terms, including interest rates and security, as for comparable transactions with third party counterparties.

Credit Rating of the Bank In accordance with the dispensation given by the Bangladesh bank, the Bank, being a branch of a foreign bank is not required to have credit rated, rather it can use the Credit Rating of its Parent Entity. The Parent Entity’s (Citibank, N.A.) ratings as of 31 December 2017:

General

Exchange rates

The assets and liabilities as at 31 December in foreign currencies have been converted to Taka at the following rates:

For capital conversion, the Bank applies the closing rate as published by the Bangladesh Bank. The exchange rate is Tk. 82.7 (2016: Tk.78.7)

Figures of previous year have been rearranged whenever considered necessary to conform to current year's presentation. Figures appearing in these financial statements have been rounded off to the nearest Taka, unless otherwise indicated. Number of employees The number of employees engaged for the whole year or part thereof who received a total yearly remuneration of Tk. 36,000 or above were 187 (2016: 167). Highlights on the overall activities Highlights on the overall activities of the Bank have been furnished in Annexure - A. Events after the balance sheet date There are no material events that had occurred after reporting period to the date of issue of these financial statements, which could affect the figures stated in the financial statements.

31

32

32.1

33

33.1

33.2

33.2.1

33.2.2

33.2.3

33.2.4

33.2.5

33.2.6

34

35

35.1

35.2

35.3

35.4

35.5

36

37

S. H. Aslam Habib

Chief Financial Officer, Bangladesh

N. Rajashekaran

Managing Director and


2017

Taka

2016

Taka

Fair value of plan assets Balance with Bank 108,175,472 100,966,944 Treasury bills/bonds 116,301,539 124,808,869

224,477,011 225,775,813Defined benefit obligation Present value of funded obligations 293,760,516 310,275,463 Present value of unfunded obligations - -

293,760,516 310,275,463

Net (liabilities)/assets (69,283,505) (84,499,650)

14.5.4 Changes in the present value of defined benefit obligations

14.5.6 Summary

Defined benefit obligations (293,760,516) (310,275,463) Fair value of plan assets 224,477,011 225,775,813

Net assets/ (liabilities) (69,283,505) (84,499,650)

Actuarial (gains)/losses due to experience and assumptions (11,783,595) 38,734,932 Experience losses 11,204,491 17,399,272

Actuarial (gains)/losses (579,104) 56,134,204 14.6 Maturity wise grouping of other liabilities On demand - - Within one month 396,731,002 86,549,853 Over one month but within three months 1,061,749,236 1,188,902,024 Over three months but within one year 444,271,382 36,403,328 Over one year but within five years

- 824,185,095 Over five years 383,618,618 -

2,286,370,238 2,136,040,300 15 Equity The Bank’s approach to capital management is driven by a desire to maintain a strong capital base to support the

development of its business, to meet the regulatory capital requirements at all times and maintain good credit rating.

15.1 Compliance with capital adequacy regulations Capital requirements for the banks at a local level are set and maintained by Bangladesh Bank. The capital that the Bank

is required to hold is determined by its balance sheet and off balance sheet positions in accordance with guidelines and various circulars on risk based capital adequacy, subject to a minimum threshold. These are explained in greater details in note 15.1.1 below. The Bank has put in place processes and controls to monitor and manage capital adequacy, no breaches were reported during the year.

As per section 13(4) of the Bank Company (amendment) Act, 2013, BRPD circular no. 11 dated 14 August 2008 and BRPD circular no. 18 dated 21 December 2014, the required value of the capital and reserves of the Bank at the close of the business on 31 December 2017 is Tk. 4,000,000,000 or 10% of risk weighted assets whichever is higher. Accordingly the required value of the capital and reserves of the Bank at the close of the business on 31 December 2017 was Tk. 4,000,000,000 (2016: Tk. 4,000,000,000). The Bank’s capital was greater than the amount required above.

15.1.1 The calculation of the Capital to Risk Weighted Assets Ratio (CRAR) has been done as per BRPD circular no. 18 dated 21

December 2014 and guidelines on Risk Based Capital Adequacy (Basel-III) as of December 2014 of Bangladesh Bank. The details of the capital as of 31 December are as follows:

(A) Total risk weighted assets (RWA) 26,094,597,658 21,978,208,612 10% of risk weighted assets 2,609,459,766 2,197,820,861

(B) Required capital (Higher of RWA and 4,000,000,000) 4,000,000,000 4,000,000,000 Total capital held: Common Equity Tier 1 (CET 1 Capital) Fund deposited with Bangladesh Bank (Note 15.2) 4,771,628,235 4,540,836,059 Retained earnings 5,260,338,622 4,749,472,584 Actuarial gain/(loss) (112,143,880) (112,722,984) Deferred tax assets on specific provision (65,453,395) (65,432,199)

9,854,369,582 9,112,153,460 Tier 2 Capital General Provision (1.25 percentage points of credit risk-weighted assets calculated under the standiardised approach for 2015) 400,326,617 347,700,641 Gain on revaluation of HFT securities - 50% 12,354,072 12,354,072 Deductions (for 2017, 60% of the gain on revaluation of HFT securities) (7,412,443) (4,941,629)

405,268,246 355,113,084 - - (C) Total capital 10,259,637,828 9,467,266,544

Surplus capital (C-B) 6,259,637,828 5,467,266,544

2016

Taka

2017

Taka

Profit before tax as perprofit and loss account 1,060,632,427 882,516,971Income tax using thetax rate at 42.5% 42.5% 450,768,782 42.5% 375,069,713Factors affecting the tax chargefor current periodNon-deductible expenses 14.26% 151,285,478 17.44% 153,939,906Deductible expenses -0.59% (6,220,743) -4.23% (37,306,150)Tax exempted income -0.20% (2,068,654) -3.91% (34,529,484)Dividend income -0.16% (1,687,500) -0.19% (1,687,500)Movement of temporary difference -3.99% (42,310,974) -4.92% (43,405,598)Adjustment for prior years 0.00% - 2.96% 26,157,914

Total income tax expenses 51.83% 549,766,389 49.66% 438,238,801

2017

% Taka

2016

% Taka

29 Reconciliation of effective tax rate

Amount Due: Not Later than one year Later than one year and not later than five years Later than five years

Government Bank and financial institution Others

NITA (Non-resident Investors Taka Account) Foreign Currency Account

ParticularsMoodyStandard & PoorFitch

Long-Term Bank DepositsA1A+AA-

----

- - -

-

- - -

-

- - -

-

- 93,833,663

93,833,663

7,056,210 197,577,204

204,633,414

2017

Taka

2016

Taka

AUD =CAD =HKD =USD =CHF =GBP =EUR =DKK =SEK =NOK =SGD =JPY =

64.3530 65.5569 10.5808 82.7000 84.4136 111.0992 98.7190 13.2585 10.0194 9.9981

61.8133 0.7329

Citibank, N.A.

Bangladesh Branches

Financial Highlights as at 31 December 2017

Sl. no. Particulars 2017 2016

Annexure - A

*Weighted Average interest on Deposit as reported to BBK as at 31 December.

Annexure - B

108,100,289 11,193,296,264

-

8,371,494,964 16,341,521,278

178,282,772

1,718,998,514 -

37,911,694,081

64,580,456

25,640,188,410 2,286,370,238 27,991,139,104 9,920,554,977

-

6,479,066,541

-

6,000,000

220,340,191

178,282,772

232,784,551 -

7,116,474,055

-

-

383,618,618 383,618,618

6,732,855,437

-

-

-

3,578,262,434 -

-

262,954,413 -

3,841,216,848

-

14,285,306,378

- 14,285,306,378

(10,444,089,530)

-

-

-

3,478,020,575

3,776,659,577

-

117,659,311 -

7,372,339,463

25,322,731

4,484,229,517 444,271,382 4,953,823,630 2,418,515,833

-

-

1,309,193,455 5,824,025,981

-

36,035,102 -

8,889,414,538

38,297,628

3,430,368,990

1,061,749,236 4,530,415,854

4,358,998,684

108,100,289

2,994,069,723

-

18,500 6,520,495,529 -

1,069,565,137 -

10,692,249,178

960,097

3,440,283,525 396,731,002 3,837,974,624 6,854,274,554

Particulars

AssetsCash in hand

Balance with Bangladesh Bank, agent bank, other banks andfinancial institutions

Money at call or short notice

Investments

Loans and advances

Fixed assets including premises, furniture and fixtures

Other assets

Non-banking assets

Total assets

LiabilitiesBorrowings from Bangladesh Bank, other banks, financialinstitutions and agents

Deposits and other accounts*

Provision and other liabilitiesTotal liabilitiesNet Liquidity Gap

Maturity up to1 month

Taka

Maturity within1 to 3 months

Taka

Maturity within3 to 12 months

Taka

Maturity within1 to 5 years

Taka

Maturity over5 years

TakaTotalTaka

Citibank, N.A. Bangladesh BranchesLiquidity Statement

(Asset and Liability Maturity Analysis)as at 31 December 2017

*Maturity analysis of deposits and other accounts have been done based on trend analysis which has been performed based on clearing and cash withdrawals

from demand deposit accounts net of withdrawals from time deposit accounts of the Bank.

Citibank, N.A.




of 11

310,275,463 41,898,077 19,357,018

- (9,753,953)

11,204,491 (79,220,580) 293,760,516

230,953,059 33,632,893

18,731,115 -

46,787,751 17,399,272

(37,228,627)

310,275,463

As at 1 January Current Service costInterest costPast Service costActuarial (gains)/lossesExperience (gains)/lossesBenefits paidAs at 31 December

14.5.5 Changes in the fair value of plan assets As at 1 January Expected returns on plan assetsContributions by the BankReturn on plan assets greater/(lesser)than discount rateBenefits paid

As at 31 December

225,775,813 14,635,033 61,257,103

2,029,642

(79,220,580)

224,477,011

188,282,726 17,206,314

49,462,581

8,052,819 (37,228,627)

225,775,813

1 Capital - fund deposited with Bangladesh Bank Taka 4,771,628,235 4,540,836,059

2 Total capital Taka 10,259,637,828 9,467,266,544

3 Capital surplus/deficit Taka 6,259,637,828 5,467,266,544

4 Capital adequacy ratio (required rate is 10%) % 39.32% 43.08%

5 Total assets Taka 37,911,694,081 39,744,970,809

6 Total deposits Taka 25,640,188,410 27,966,018,791

7 Total loans and advances Taka 16,341,521,278 8,954,852,250

8 Total contingent liabilities and commitments Taka 18,976,064,618 20,738,387,316

9 Advances/deposit ratio % 63.73% 32.02%

10 Classified advances as (%) of total advances % 1.35% 2.46%

11 Net profit after tax and provisions Taka 510,866,038 444,278,170

12 Amount of classified loans during current year Taka 220,340,191 220,287,691

13 Amount of provisions against classified loans Taka 162,113,674 162,061,174

14 Provision surplus / (shortage) Taka 32,084,287 42,766,394

15 Interest suspense account Taka 58,226,517 58,226,517

16 Interest bearing assets Taka 33,417,435,144 33,094,062,662

17 Non-interest bearing assets Taka 4,494,258,937 7,576,273,171

18 Return on investment (ROI) % 5.35% 4.73%

19 Return on assets (ROA) % 1.32% 1.13%

20 Incomes from Investment Taka 419,561,437 472,457,144

21 Cost of fund* % 0.45 0.13

13,046,575,556 21,329,227,591

56.7821 58.2101 10.1474

78.7000 76.8592 96.4469 82.2848

11.0679 8.6084 9.0461 54.3171 0.6750

1,720,160,000



2017 2016

AUD

CAD

HKD

USD

CHF

GBP

EUR

DKK

SEK

USD

USD

NOK

SGD

USD

JPY

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

Current a/c

FC amount Exchange rate Equivalent taka FC amount Exchange rate

Foreign currency

Equivalent taka Deposit typeName of the bank

Citibank, N.A.

Bangladesh Branches

Balance with other banks and financial institutions (Outside Bangladesh)

as at 31 December 2017

Annexure - C

Script No Type Face value

Booking

date

Maturity

date

Book

value

Market

value Gain/(Loss)

Amortized

Cost (Bills)/

Purchase Price

(Bonds)

Figures in Taka

Citibank, N.A.Bangladesh Branches

Schedule of Treasury Bill/Treasury Bonds as at 31 December 2017

Annexure - D

Funded Non Funded Total

Amount outstanding

2016

Fundedoutstanding

Name of clientsSl. No.

2017

16

11,601,003,427

-

-

16

5,910,491,714

-

-

Number of clients

Amount of outstanding advances (Taka)

Amount of classified advances (Taka)

Measures taken for recovery (Taka)

Client-wise break up is as follows:

2017

Taka

2016

Taka

Annexure-E

Citibank, N.A.Bangladesh BranchesDetails of Large Loan

as at 31 December 2017

Annexure - H

Average balance heldwith Bangladesh Bank

2,131,102,104

Date Actual balance held

with Bangladesh Bank(Taka)


Bi-weekly average balance of Bangladesh Bank statementfor the month of December 2017


Reconciliation between Bangladesh Bank's statement and Banks' statementas at 31 December 2017

Annexure - I

As per

Bangladesh

Bank statement

As per Bank's

general ledger

Reconciling

difference

Taka Taka Taka

Local currency

Foreign currency

As per

Bangladesh Bank

statement

Reconciling

difference

USD USD Taka USD

Total

As per

Bangladesh Bank

statement

Reconciling

difference

GBP GBP Taka GBP

GBP clearing account 33,987

33,987

3,775,930

Bank credited but Bangladesh Bank had not debited

Bank debited but Bangladesh Bank had not credited

Bangladesh Bank credited but Bank had not debited

Bangladesh Bank debited but the bank had not credited

As per

Bangladesh Bank

statement

Reconciling

difference

EUR EUR Taka EUR

EUR clearing account 81,214

81,214 8,017,332

-

Bank Credited but Bangladesh Bank had not debited

Bank Debited but Bangladesh Bank had not credited

Bangladesh Bank credited but Bank had not debited

Bangladesh Bank debited but the bank had not credited

Total (Taka) 4,986,556,047

As per Bank's general ledger



In order to comply with the CRR and SLR requirements, the Bank considers the actual balances held with Bangladesh Bank according to their (Bangladesh Bank) books of accounts. However, when preparing the statutory accounts the Bank considers the actual balances held with Bangladesh Bank according to the Bank's books of accounts. This results in reconciling differences between the Bank's statutory accounts and CRR and SLR requirements.

-

-

-

-

-

-

-

-

-

-

-


Balance from other banks (Outside Bangladesh)as at 31 December 2017

FC amount Exchange rate Equivalent taka FC amount Exchange rate

Citibank, Mumbai

Citibank, Colombo

Citibank, New York Foreign Exchange

Citibank, London

Citibank Europe Plc.

Citibank, Japan Ltd.

Citibank, Berhad Ltd.

2016

Annexure - J

Name of the bank

Citibank, Bangladesh Offshore Banking unit

Account type

Foreign

currency

2017

3,212,739

587,506

11,065,788

11,908,566

5,858,928

129,787,897

74,090

3,332,023

82.7000

82.7000

82.7000

1.0000

1.0000

1.0000

1.0000

1.0000

265,693,548

48,586,738

915,140,630

11,908,566

5,858,928

129,787,897

74,090

3,332,023

1,380,382,420

145,943,059

20,497,147

268,418,925

15,007,470

17,363,411

108,167,210

74,090

959,490

576,430,802

78.7000

78.7000

78.7000

1.0000

1.0000

1.0000

1.0000

1.0000

1,854,423

260,447

3,410,660

15,007,470

17,363,411

108,167,210

74,090

959,490

USD

USD

USD

BDT

BDT

BDT

BDT

BDT

Vostro A/C

Vostro A/C

Vostro A/C

Vostro A/C

Vostro A/C

Vostro A/C

Vostro A/C

Vostro A/C


WrittenParticulars

Own Assets

Additions down valueduring Rate of as at

Balanceas at

1 January the year

Balanceas at

31 December dep.

Balanceas at

1 January

Chargedduring

the year

Balanceas at

31 December 31 December

Taka Taka Taka Taka % Taka Taka Taka Taka Taka

Cost Depreciation

Furniture and fixturesOffice equipmentVehicle

Schedule of fixed assets including premises, furniture and fixturesas at 31 December 2016

Citibank, N.A.




of 11

Citibank, Australia

Citibank, Canada

Citibank, Hong Kong

Citibank, Karachi

Citibank, London

Citibank, London

Citibank, London

Citibank, London

Citibank, London

Citibank, Mumbai

Citibank, New York

Citibank, Norway

Citibank, Singapore

Citibank, Sri Lanka

Citibank, Tokyo

Citibank, Singapore

5,575

3,901

4,407

211,381

5,270

45,928

681,734

4,329

6,961

1,809,118

13,888,429

2,861

2,559

49,288

3,399,358

24,800,000

64.3530

65.5569

10.5808

82.7000

84.4136

111.0992

98.7190

13.2585

10.0194

82.7000

82.7000

9.9981

61.8133

82.7000

0.7329

82.7000

358,778

255,760

46,634

17,481,207

444,887

5,102,521

67,300,100

57,390

69,741

149,614,046

1,148,573,072

28,607

158,210

4,076,120

2,491,376

2,050,960,000

10,513

8,864

4,406

212,449

2,383

1,097,712

1,387,897

3,124

6,961

1,655,659

106,332,834

3,940

7,487

49,780

13,882,286

-

56.7821

58.2101

10.1474

78.7000

76.8592

96.4469

82.2848

11.0679

8.6084

78.7000

78.7000

9.0461

54.3171

78.7000

0.6750

-

596,950

515,987

44,706

16,719,747

183,136

105,870,903

114,202,830

34,579

59,920

130,300,359

8,368,394,000

35,641

406,659

3,917,683

9,371,154

-

8,750,654,253

BD0909110183

BD0909111181

BD0909116180

Treasury Bill

Treasury Bill

Treasury Bill

1,000,000,000

150,000,000

600,000,000

1,750,000,000

9-Oct-17

16-Oct-17

11-Dec-17

8-Jan-18

15-Jan-18

12-Mar-18

999,326,517

149,808,282

596,025,705

1,745,160,504

999,250,286

149,792,184

596,145,402

1,745,187,872

999,250,286

149,792,184

596,145,402

1,745,187,872

76,232

16,098

(119,698)

(27,368)

BD0918371057

BD0918411028

BD0919301053

BD0918251051

BD0918371107

BD0918371107

BD0918331051

BD0918061054

BD0918061054

BD0918451024

BD0919341059

BD0918011026

BD0918061054

BD0918101058

BD0918221054

BD0919301053

BD0919051104

BD0918451024

BD0919461055

BD0919261059

BD0918061054

BD0919231029

BD0918011026

BD0919231029

BD0919231029

BD0919231029

BD0919111023

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Treasury Bond

Grand total

200,000,000

200,000,000

400,000,000

160,000,000

67,500,000

40,000,000

186,500,000

200,000,000

300,000,000

416,800,000

155,000,000

100,000,000

152,400,000

225,400,000

250,000,000

300,000,000

200,000,000

200,000,000

23,600,000

1,020,000,000

150,000,000

150,000,000

120,000,000

500,000,000

100,000,000

400,000,000

200,000,000

6,417,200,000

8,167,200,000

7-Dec-15

4-May-16

15-May-16

2-Jun-16

7-Jun-16

8-Jun-16

8-Jun-16

10-Jul-16

27-Jul-16

8-Aug-16

9-Aug-16

5-Oct-16

31-Oct-16

31-Oct-16

31-Oct-16

11-Jan-17

16-Jan-17

16-Jan-17

16-Jan-17

12-Feb-17

21-May-17

5-Jul-17

20-Jul-17

16-Nov-17

23-Nov-17

3-Dec-17

6-Dec-17

202,913,521

199,994,640

419,937,071

160,048,615

68,440,827

40,562,692

188,404,995

206,329,660

308,918,566

417,561,024

163,207,842

100,701,016

158,508,912

235,412,266

264,045,339

321,401,163

212,282,960

201,642,271

25,410,675

1,092,886,975

157,086,300

149,063,226

121,106,597

499,460,116

99,901,706

400,154,354

199,992,296

6,615,375,625

8,360,563,497

203,480,000

200,540,577

426,610,654

160,058,655

68,665,227

40,690,505

188,821,236

208,468,805

312,703,207

419,206,387

165,179,758

100,933,546

158,853,229

235,979,511

265,026,084

319,957,990

211,233,546

201,154,696

25,259,417

1,084,859,522

156,351,604

149,361,242

121,120,255

497,870,807

99,574,162

398,296,646

200,058,692

6,620,315,960

8,365,476,464

(22,011,400)

390,979

(20,041,347)

(14,064,225)

(5,445,588)

(3,257,573)

(15,853,002)

(11,970,196)

(15,467,994)

(778,382)

(6,946,347)

(1,313,354)

(10,625,325)

(15,598,220)

(15,443,417)

(19,226,210)

(7,993,054)

(4,006,304)

(1,286,099)

(67,404,900)

(7,551,296)

731,042

(890,345)

(1,504,190)

(313,939)

(1,857,353)

58,692

(269,669,347)

(269,696,715)

3-Apr-18

4-May-18

12-Feb-19

2-Jan-18

2-Apr-18

2-Apr-18

6-Mar-18

14-Aug-18

14-Aug-18

8-Jun-18

12-Mar-19

13-Jul-18

14-Aug-18

11-Sep-18

11-Dec-18

12-Feb-19

5-Aug-19

8-Jun-18

11-Jun-19

15-Jan-19

14-Aug-18

4-Jan-19

13-Jul-18

4-Jan-19

4-Jan-19

4-Jan-19

6-Dec-19

225,491,400

200,149,598

446,652,000

174,122,880

74,110,815

43,948,078

204,674,238

220,439,001

328,171,201

419,984,769

172,126,105

102,246,900

169,478,554

251,577,731

280,469,501

339,184,200

219,226,600

205,161,000

26,545,516

1,152,264,421

163,902,900

148,630,200

122,010,600

499,374,999

99,888,100

400,154,000

200,000,000

6,889,985,307

8,635,173,179

1 Govt. of the People’s Republic of Bangladesh

2 Pendekar Energy Ltd.

3 Grameenphone Limited

4 British American Tobacco Bangladesh Company Limited

5 Syngenta Bangladesh Limited

6 C.P. Bangladesh Company Ltd.

7 Nestle Bangladesh Limited

8 Karnaphuli Fertilizer Co Ltd.

9 Khulna Power Company Limited

10 International Beverage Private Limited

11 Banglalink Digital Communications Ltd.

12 Akij Group

13 Pacific Jeans Group

14 Novartis Bangladesh Limited

15 Square Group

16 Lafarge Surma Cement Limited

17 Sanofi Aventis Bangladesh Limited

18 MJL Bangladesh Limited

19 M & J Group

20 IBM Bangladesh Private Limited

21 Standard Group

22 Pran Group

23 Robi Axiata Ltd

24 Huawei Technologies Bangladesh Ltd.

25 Incepta Group

26 Bayer Cropscience Limited

27 BRAC

28 Sajida Foundation

Total

-

-

-

924,226,542

1,396,479,639

659,520,000

-

-

1,810,818,056

1,159,452,275

-

-

-

1,250,325,689

2,081,838

-

-

672,169,129

161,058,126

10,641,969

261,024,520

752,240,316

1,402,710,417

-

-

595,553,696

506,222,222

36,478,995

11,601,003,427

1,951,720,000

49,344,576

509,369,345

593,341,047

297,418,595

17,151,787

1,314,818,605

18,991,409

545,528,847

30,048,573

566,038,710

59,862,673

185,729,774

120,544,692

87,939,647

373,680,645

178,998,676

267,060,187

1,325,918,771

-

705,074,896

198,582,569

-

24,227,307

205,717,226

74,929,839

-

625,664,812

10,327,703,206

-

-

350,159,444

355,066,472

1,294,494,542

-

1,504,676

-

391,046,500

35,459,685

-

698,690

-

349,180,386

-

-

-

22,278,187

436,247,342

789,451,986

489,783,221

357,857,939

1,005,580,556

-

1,423,602

30,258,486

-

-

5,910,491,714

1,951,720,000

49,344,576

509,369,345

1,517,567,588

1,693,898,234

676,671,787

1,314,818,605

18,991,409

2,356,346,903

1,189,500,849

566,038,710

59,862,673

185,729,774

1,370,870,380

90,021,485

373,680,645

178,998,676

939,229,315

1,486,976,898

10,641,969

966,099,416

950,822,885

1,402,710,417

24,227,307

205,717,226

670,483,535

506,222,222

662,143,807

21,928,706,633


Annexure-F

WrittenParticulars

Own Assets

Additions down value

during Rate of as atBalance

as at1 January the year

Adj./Disposalduring

the year

Balanceas at

31 December dep.

Balanceas at

1 January

Chargedduring

the year

Balanceas at

31 December 31 December

Taka Taka Taka Taka % Taka Taka Taka Taka Taka

Cost Depreciation

Schedule of fixed assets including premises, furniture and fixturesas at 31 December 2017

286,059,850 277,041,389 30,365,526

593,466,765

149,426,815 195,539,067 30,365,521 375,331,403

31,396,632 26,993,816

- 58,390,448

(3,002,310) (55,803,182)

- (58,805,492)

177,821,137 166,729,701 30,365,521

374,916,359

105,117,181 73,165,586

5 178,282,772

10-33.3310-33.33

20

282,938,318 239,895,287

30,365,526 553,199,131

(3,121,532) (55,912,134)

- (59,033,666)

- 18,766,032

- 18,766,032

141,443,414 415,641,496 30,365,526

587,450,436

52,670,202 244,025,255 30,365,521 327,060,978

17,579,336 45,237,818

- 62,817,154

79,177,277 (93,724,006)

- (14,546,729)

149,426,815 195,539,067

30,365,521 375,331,403

136,633,035 81,502,322

6 218,135,362

10-33.3310-33.33

20

286,059,850 277,041,389 30,365,526

593,466,765

143,865,441 (159,210,770)

- (15,345,329)

750,995 20,610,663

- 21,361,658

Furniture and fixturesOffice equipmentVehicle

Bangladesh Bank DhakaBangladesh Bank RTGS SettlementBangladesh Bank Chittagong

USD clearing accountUSD capital account

3,173,811 57,698,044 60,871,855

2,456,282 57,698,044 60,154,326

203,134,550 4,771,628,235

4,974,762,785

717,529 -

717,529

192,807

(27,899)

1,807,928

(1,255,307)

717,529

Bank credited but Bangladesh Bank had not debitedBank debited but Bangladesh Bank had not creditedBangladesh Bank credited but Bank had not debited Bangladesh Bank debited but the bank had not credited

Bank Credited but Bangladesh Bank had not debitedBank Debited but Bangladesh Bank had not creditedBangladesh Bank credited but Bank had not debited Bangladesh Bank debited but the bank had not credited

269,874,377

(287,906,362)

-

(561,467)

(18,593,452)

1,820,698,712

-

178,734,659

1,999,433,371

1,839,291,144

-

178,735,679

2,018,026,823

(18,592,432)

-

(1,020)

(18,593,452)


Calculation of deferred tax assetsas at 31 December 2017 Annexure - G

Assets (Liabilities) Book value Permanent difference Accounting Base Tax base

Taxable (deductible) temporary diff

Deferred tax (asset) liability

VehiclesFurniture and fixturesOffice equipmentComputerReserve for LTA/ Medical Specific provisionUnrealised MTM loss on Treasury bills/ bondsCapital loss on treasury billProvision for gratuityClosing balance as at 31 December

6 105,117,180 50,366,136 22,799,450 - (162,113,674) (270,969,758) - - (254,800,660)

- - - - - - - - - -

6 105,117,180 50,366,136 22,799,450 - (162,113,674) (270,969,758) - - (254,800,660)

4,846,543 76,473,573 183,824,340 11,368,773 - - - - - 276,513,228

(4,846,537) 28,643,608 (133,458,204) 11,430,677 - (162,113,674) (270,969,758) - - (531,313,888)

(2,059,778) 12,173,533 (56,719,737) 4,858,038 - (68,898,311) (115,162,147) - - (225,808,402)


Calculation of deferred tax assetsas at 31 December 2016

Assets (Liabilities) Book value Permanent difference Accounting Base Tax base

Taxable (deductible) temporary diff

Deferred tax (asset) liability

VehiclesFurniture and fixturesOffice equipmentComputerReserve for LTA/ Medical Specific provisionUnrealised MTM loss on Treasury bills/ bondsCapital loss on treasury billProvision for gratuityClosing balance as at 31 December

6 136,633,035 57,295,071 24,207,250 - (162,061,174) (178,498,269) - - (122,424,081)

- - - - - - - - - -

6 136,633,035 57,295,071 24,207,250 - (162,061,174) (178,498,269) - - (122,424,081)

6,058,179 85,989,050 207,507,623 9,779,723 - - - - - 309,334,575

(6,058,173) 50,643,985 (150,212,552) 14,427,527 - (162,061,174) (178,498,269) - - (431,758,656)

(2,574,724) 21,523,693 (63,840,335) 6,131,699 - (68,875,999) (75,861,764) - - (183,497,428)

15-Dec-17

16-Dec-17

17-Dec-17

18-Dec-17

19-Dec-17

20-Dec-17

21-Dec-17

22-Dec-17

23-Dec-17

24-Dec-17

25-Dec-17

26-Dec-17

27-Dec-17

28-Dec-17

29-Dec-17

30-Dec-17

31-Dec-17

1,835,416,601

1,835,416,601

1,913,771,952

2,338,090,235

1,971,473,733

2,161,196,431

2,616,223,897

2,616,223,897

2,616,223,897

2,115,897,461

2,115,897,461

2,137,703,058

1,957,467,057

1,999,433,371

1,999,433,371

1,999,433,371

1,999,433,371

Equivalent taka

3,447,018,449

Time placement USD

Adj./Disposalduring

the year

Adj./Disposalduring

the year

Adj./Disposalduring

the year*

* During 2016 fixed asset cost of BDT 153,142,875 has been reclassified from office equipment to furniture and fixtures. Reclassified amount of accumulated depreciation is BDT 87,927,988


Disclosure on Market Discipline as required under Pillar III of Basel IIIfor the year ended 31 December 2017

The following detailed qualitative and quantitative disclosures are provided in accordance with Bangladesh Bank rules and regulations on capital adequacy under Basel III issued through BRPD Circular 18 (21 December 2014).The purpose of these requirements is to complement the minimum capital requirements and the Supervisory review process. These disclosures are intended for market participants to assess key information about the Bank’s exposure to various risks and to provide a consistent and understandable disclosure framework for easy comparison among banks operating in the market.

The Bank follows the disclosure policy to observe the disclosure requirements as set out by the Bangladesh Bank and International Financial Reporting Standards (IFRSs) and International Accounting Standards (IAS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) into Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs) where relevant to the Bank.

Guidelines on Risk Based Capital Adequacy are structured around the following three aspects or pillars of Basel III:

Minimum capital requirements maintained by a bank against credit, market and operational risk;

Supervisory Review i.e. Process for assessing overall capital adequacy in relation to a bank's risk profile and a strategy for maintaining its capital at an adequate level;

Market Discipline i.e. public disclosure of information on the bank's risk profiles, capital adequacy and risk management.

1. Scope of Application Qualitative Disclosures:Bank has no subsidiaries or significant investments and Basel III is applied at the Bank level (Onshore operations) only.Quantitative Disclosures:Not Applicable

2. Capital Structure

(a) Qualitative Disclosures:Citibank N.A., Bangladesh capital structure consists of Tire I Capital and Tier II Capital. For the purpose of calculating capital under capital adequacy framework, the capital of banks shall be classified into two tiers. The total regulatory capital will consist of sum of the following categories: 1) Tier 1 Capital (going-concern capital); a) Common Equity Tier 1 & b) Additional Tier 1 2) Tier 2 Capital (gone-concern capital). All banks will be required to maintain the following ratios on an ongoing basis:

i. Common Equity Tier 1 of at least 4.5% of the total RWA. ii. Tier-1 capital will be at least 5.5% of the total RWA for 2015 & 2016. The requirement will be 6% from 2017. iii. Minimum CRAR of 10% of the total RWA. iv. Additional Tier 1 capital can be admitted maximum up to 1.5% of the total RWA or 33.33% of CET1, whichever is higher. v. Tier 2 capital can be admitted maximum up to 4.0% of the total RWA or 88.89% of CET1, whichever is higher. vi. In addition to minimum CRAR, Capital Conservation Buffer (CCB) of 2.5% of the total RWA is being introduced (@0.625% per year from 2016 to 2019) which will be maintained in the form of CET1.

Tier I capital of the bank includes fund deposited with Bangladesh Bank, actuarial gain/(loss), and retained earnings. Tier I capital, also called "Common Equity Tier 1 Capital" of the bank.

Tier II capital consists of the general provision and revaluation reserve for Held for trading (HFT) securities subject to the provisions mentioned in the guidelines and relevant circulars.

The bank does not have any Additional Tier 1 capital.

Quantitative Disclosures:

(b) The details of capital structure are provided as under:

3. Capital Adequacy

(a) Qualitative Disclosures: Citibank, N.A. Bangladesh Office is operating as Branch Office of the Head Quarter in New York, USA and is represented by appointed/nominated Citi Country Officer (CCO). Since Citibank N.A. is not an incorporated banking company in Bangladesh and since there aren’t any shareholder directors, CCO is the chief custodian for all franchise issues in Bangladesh. CCO along with other members of Senior Management representing the Country Coordination Committee (CCC) provide the governance oversight for Citibank, N.A. Bangladesh, which in case of a locally incorporated entity would have been expected from the Board of Directors. Citi’s Risk Capital framework relies on and is complementary to its Corporate Governance and Risk Management framework, which balances corporate oversight with independent risk management functions within each business. A sound risk management process, strong internal controls and well documented policies and procedures are the foundation for ensuring the safety and soundness of the Bank. The Country Coordination Committee (CCC) and Senior Management ensure that capital levels are adequate for the Bank’s risk profile. They also ensure that the risk management and control processes are appropriate in the light of the Bank’s risk profile and business plans.

Senior Management including CCC deal with the following: Oversight of Basel II implementation and new requirements Annual review of risk limits and concentrations

Capital planning Quarterly risk assessment and capital adequacy review against target Annual Review of ICAAP Under the supervision of the senior management of the bank, the Country Risk Management Committee (CRMC) discusses, reviews and manages the material risks faced by the bank. The committee is headed by Chief Risk Officer and attended by Citi Country Officer and is also represented by all risk monitoring units within the bank. The committee meets at least monthly to review the current material risks faced by the bank.

Internal Capital Adequacy Assessment Process (ICAAP) represents the Bank's own assessment of its internal capital requirements. The Bank's approach for calculating its own internal capital requirement has been to take the minimum capital required for credit risk, market risk and operational risk under Pillar-I as the starting point and assess whether this is sufficient to cover those risks and then identify other risks (Pillar-II) and assess prudent level of capital to ensure capital adequacy.

The Bank's Asset Liability Committee (ALCO) is responsible for the review of overall asset and liability position, liquidity position, capital adequacy, balance sheet risk , interest risk and as and when required necessary changes are made to ensure various risks are adequately managed. The object of liquidity risk management is to ensure that all foreseeable funding commitments and deposit withdrawals can be met when due and regularly monitored. As per the Bangladesh Bank guideline, the Bank has implemented all of the core risk management guideline for banks.

3.Credit Risk(a) Qualitative Disclosures:

Definitions of past due and impaired (for accounting purposes)

Past dues and impaired exposures are defined in accordance with the relevant Bangladesh Bank regulations. Specific and general provisions are computed periodically in accordance with the Bangladesh Bank regulations.

Special Mention Account (SMA)

These assets have potential weaknesses thus deserve management’s close attention. If left uncollected, these weaknesses may result in direction of the repayment prospect of the borrower. Sub-Standard

These are the loans where bank has reason to doubt about the payment of the loan although recovery prospect is encouraging. Doubtful.

If the loan is overdue for 06 months or beyond but not over 09 months from the date of expiry or claim by the bank or from the date of creation of forced loan or if defaulted installment is equal to or more than the installment(s) due within 06 months then it is considered doubtful.

Bad/ loss.

These are the loans that have a bleak recovery possibility.

Unclassified

These are the loans where bank is fully satisfied about its repayment.

Description of approaches followed for specific and general allowancesand statistical methods;

As per relevant Bangladesh bank guidelines, 0.25% to 5% provision is maintained against unclassified loans, 5% to 20% provision is maintained against sub-standard loans, 5% to 50% provision is maintained against doubtful loans and 100% provision is maintained against bad/ loans after deducting value of eligible security, if any, as per Bangladesh Bank guidelines. All interest is suspended/ discontinued if the loan is identified as sub-standard, doubtful or bad/ loss.

Discussion of the bank’s credit risk management policy

Credit risk is the risk of financial loss if a customer or counterparty fails to meet a payment obligation under a contract. It arises principally from direct lending, trade finance and leasing business, but also from off-balance sheet products such as guarantees and credit derivatives, and from the holdings of debt securities. The failure may result from unwillingness of the counter party or decline in his / her financial condition. Among the risks the Citibank N.A. Bangladesh engages in, credit risk generates the largest regulatory capital requirement. Citibank N.A. Bangladesh has standards, policies and procedures dedicated to controlling and monitoring risk from all such activities. The aims of credit risk management, underpinning sustainably profitable business, are principally: ** to maintain a strong culture of responsible lending, supported by a robust risk policy and control framework;** to both partner and challenge business originators effectively in defining and implementing risk appetite, and its re-evaluation under actual and scenario conditions;** to ensure independent, expert scrutiny and approval of credit risks, their costs and their mitigation.

The standardized approach is applied for risk weighting of exposure as per directive of Bangladesh Bank. It requires banks to use risk assessments prepared by External Credit Assessment Institutions (ECAIs) to determine the risk weightings applied to rated counterparties. The bank has used all customer ratings wherever available for use based on their entity rating as assigned by the approved ECAIs of Bangladesh Bank. Credit risk is one of the major risks faced by the Bank. To assess and to mitigate the credit risk, the Bank has implemented risk management manual, which is considered an important tool for retaining the quality and performance of the assets. Accordingly, the Bank’s credit risk management functions have been designed to address all these issues including risks that arise from global changes in banking, finance and related issues.

The Bank has defined segregation of duties for all credit risk related activities like credit approval, administration, monitoring and recovery functions. The Bank has set policies and procedures for the controlling and monitoring of credit risks from these activities. A thorough risk assessment is done before sanction of any credit facility at risk management units. The risk assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer, security of the credit facility etc.

Bank also has established separate Credit Risk Management Services which looks after Loan Review Mechanism and also helps in ensuring credit compliance with the post-sanction processes/ procedures laid down by the Bank from time to time. Bank has in place a risk grading system for analyzing the risk associated with credit. The parameters, while risk grading the customers, include financial condition and performance, quality of disclosures and management, facility structure, collateral and country risk assessment where necessary. Maximum counterparty/group exposures are limited to 15% (funded) of the bank’s capital base as stipulated by Bangladesh Bank. Where a higher limit is required for projects of national importance, prior approval of Bangladesh Bank is obtained.

Equities: Disclosures for Banking Book Positions:

Qualitative Disclosures:

Citibank N.A. has equity holdings of unquoted shares of Central Depository Bangladesh Limited.

Valuation of Unquoted Shares:

Unquoted shares are valued at cost price as per latest audited accounts

Interest rate ris in the banking book (IRRBB)


Interest rate risk is the risk where changes in market interest rates might adversely affect a bank’s financial condition. The immediate impact of changes in interest rates is on the Net Interest Income (NII). A long term impact of changing interest rates is on the Bank’s net worth since the economic value of a Bank’s assets, liabilities and off-balance sheet positions get affected due to variation in market interest rates. The responsibility of interest rate risk management rests with the Bank’s Asset and Liability Management Committee (ALCO) and Risk Treasury (RT) department. Bank periodically computes the interest rate risk on the banking book that arises due to re-pricing mismatches in interest rate sensitive assets and liabilities. For the purpose of monitoring such interest rate risk, the Bank has in place a system that tracks the re-pricing mismatches in interest bearing assets and liabilities. For computation of the interest rate mismatches Citi Policies are followed.

Bank adopts maturity method in measuring interest rate risk in respect of securities in trading book. The capital charge for entire market risk exposure is computed under the standardized approach using the maturity method and in accordance with the guideline issued by Bangladesh Bank.Interest rate exposures as per Citi Policies are placed to ALCO.

Other Tools for measuring & analyzing interest rate risk Interest Rate Gap Analysis utilizes the maturity or re-pricing schedules of balance sheet items and hedge accounted derivatives to determine the differences between maturing or re-pricing items within given tenor buckets.

Interest Rate Exposure (‘IRE’) measures the potential pre-tax accounting earnings impact, over specified reporting periods, from a defined parallel shift in the yield curve. It is a forward-looking measure, analogous to Factor Sensitivity on the trading portfolios.

Value-at-close is a point-in-time estimate of the ‘fair value’ of an accrual portfolio – not a liquidation value. It must be calculated for all Treasury Units and for those business units where the residual positions can be reliably marked-to-market.

Market Risk


Market Risk is the risk to the bank’s earnings and capital due to changes in the market level of interest rates or prices of securities, foreign exchange and equities, as well as the volatilities of those changes. Methods used to measure Market risk - As per the instructions from the Bangladesh Bank, the Bank uses the standardized (market risk) approach to calculate market risk for trading book exposures. The total capital requirement in respect of market risk is the aggregate capital requirement calculated for each of the risk sub-categories. For each risk category minimum capital requirement is measured in terms of two separately calculated capital charges for "specific risk" and "general market risk".

Market Risk Management system - The Treasury Division manage market risk covering liquidity, interest rate and foreign exchange risk with oversight from Asset-Liability Management Committee (ALCO) comprising senior executives of the Bank. ALCO meets at least once in a month.

Policies and processes for mitigating market risk:- The bank's policy is to control material risks through a framework of limits & triggers approved by ALCO and manage the same through robust controls over calculating, monitoring and reporting results. The risk appetite is largely determined and controlled due to regulatory limits on foreign exchange. The spot foreign exposure is limited through the Net Open Position which is approved by BB. Aggregate interest rate exposures on trading account is controlled by limits on DV01. Further, trading exposures are controlled through additional risk management tools such as Value-at-Risk (VaR) and Loss Trigger Limits for Trading and AFS book. All market risk taking activity in the Bank is centralised with Treasury and undertaken by authorised dealers. The independent Market Risk Management monitors the trading and banking book exposures against approved limits and triggers on a daily basis.

Trading book consists of positions in financial instruments held with trading intent or in order to hedge other elements of the Trading Book. A capital charge will be applicable for financial instruments which are free from any restrictive covenants on tradability, or able to be hedged completely. Generally, investments in ‘Held for Trading’ portfolios are focal parts of the Trading Book.

Capital charge means an amount of regulatory capital which the bank is required to hold for an exposure to a relevant risk which, if multiplied by 10.00, becomes the risk-weighted amount of that exposure for that risk. Citibank Bangladesh Follows its global policies for managing market risk. DV01 and NOP limits are followed to ensure that the activity is run in a controlled manner. A daily report on DV01 is circulated to the traders and the Head of Global Markets. The Traders are required to operate within approved limits which are reviewed at least once annually. Traders are encouraged to seek pre-approvals where they feel a proposed transaction can exceed the limits.

Foreign exchange risk

Foreign exchange risk is defined as the potential change in earnings due to change in market prices. The foreign exchange risk of the Bank is minimal as all the transactions are carried out on behalf of the customers against underlying L/C commitments and other remittance requirements. Treasury Department independently conducts the transactions and the back office of treasury is responsible for verification of the deals and passing of their entries in the books of account. All foreign exchange transactions are revalued at Mark-to-Market rate at the balance sheet date.

Operational Risk

Qualitative Disclosures:Operational Risk is the risk of loss resulting from inadequate or failed internal processes, systems, or human factors, or from external events. It includes reputation and franchise risks associated with the bank’s business practices or market conduct. It also includes the risk of failing to comply with applicable laws, regulations, ethical standards, regulatory administrative actions or internal policies. There are five Event Types for categorizing operational risk as shown below:• Clients, Products and Business Practices• Execution, Delivery and Process Management• Fraud, Theft and Unauthorized Activity• Employment Practices and Workplace Environment and• Physical Asset and Infrastructure. Operational risk is inherent in every business organization and covers a wide spectrum of issues. The Bank manages such risk through a robust internal control framework supported by regular monitoring of risk events and periodic reviews by internal audit. The bank maintains an Operational Risk Management Framework with a Governance Structure to support its core operational risk management activities of anticipation, mitigation and recovery. To ensure effective management of operational risk across the bank, the Governance Structure presents three lines of defense, as below. i) 1st Line of Defense:- Business, In Business Risk Management and Functional Specialities - The business owns it risk including operational risk and is responsible for its management. They are responsible for identifying and reporting operational risks to Independent Risk Management and Control Functions. The functional specialists are responsible for advising on, contributing to,executing, and/or overseeing key controls in support of efficient and effective management of operational risk.ii) 2nd Line of Defense:- Oversight by Independent Risk Management and Control Functions. Risk and Control function partner manage operational risk by designing, implementing and assessing the effectiveness of controls.The Second Line of Defense Control Functions include Risk Management and its Operational Risk Management (ORM) , Compliance, Finance, Human Resources, and Legal.iii) 3rd Line of Defense:- Independent Assessment of Internal Audit - Recommends enhancement on an ongoing basis and provides independent assessment and evaluation. An independent Operational Risk function within the Group Risk function works alongside business and functional management, to ensure operational risk exposures are managed within acceptable risk tolerance limits. Group Operational Risk is responsible for setting the operational risk policy and defining standards for measurement." Governance over operational risks is ensured through a defined structure of risk committees at group, business function and country levels. Business Risk Compliance & Control (“BRCC”) & Country Account Review Committee (ARC) have the responsibili-ty for oversight of operational risks and significant issues at a country level. Country Risk Management Committee (CRMC) has the responsibility for oversight of all risks and significant issues at the country level. The bank has robust mechanism to identify and monitor operational risks. It follows Manager’s Control Assessment program that helps managers to identify significant operational risks, assess effectiveness of controls, detect and address weakness in control design/ execution, determine issue severity and detect and address emerging operational risks to business activities. At a global level the effectiveness of senior management is tracked through various risk metrics. In line with the instructions from the Bangladesh Bank the Bank uses the basic indicator approach to calculate its operational risk Capital Charge.

Capital charge means an amount of regulatory capital which the bank is required to hold for an exposure to a relevant risk which, if multiplied by 10.00 it becomes the risk-weighted amount of that exposure for that risk.

Liquidity Risk Qualitative Disclosures: ALCO supervises the liquidity condition through ALCO meetings and takes appropriate measure to address liquidity related issues. As per the policy Treasury prepares the Funding and Liquidity Plan, which is endorsed by the Country ALCO. Citibank, N.A., Bangladesh Branch is also integrated into the overall Citi liquidity and funding process and liquidity-monitoring framework. The bank adheres to Group Liquidity policies as set out in the Liquidity Risk Management Policy for Citi including structural liquidity metrics like core regression for liability balances and S2 ratio for the overall balance sheet. Citigroup Liquidity Risk Management Policy defines the Liquidity Risk Appetite as necessitating that each Liquidity Management Unit (Citibank Bangladesh branch, in this case). Citibank must maintain sufficient liquidity to meet all maturing obligations for the next 12 months under the most conservative of their designated stress scenarios. MAR (Market Access Limit) Limits are established based on an evaluation of the contingent liquidity capacity of the LMUs under the most conservative stress scenario. This is evaluated for limits out to 12 months and incorporates stressed outflows of deposits. Additional metrics used to assess Structural liquidity on the balance sheet include Liquidity ratios specified for LCY & FCY like:- Deposits/ loans- Core deposits/ loans- Concentration ratios like top 5 Significant funding sources (SFS) as a % of total customer liabilities- Top 5 Customers deemed as sensitive to Citibank rating changes as a % to total customer liabilities

Leverage Ratio Qualitative Disclosures: Leverage Ratio is calculated in accordance to Bangladesh Bank’s Guidelines on Risk Based Capital Adequacy on a quarterly basis. The Country Coordination Committee (CCC) and senior management ensure that capital levels are adequate and is a good fit with the bank’s risk profile and exposure level. Leverage ratio is calculated by dividing Tier 1 capital with Total exposure. Total exposure comprises of:i) On balance sheet, non-derivative exposures net of specific provisions and valuation adjustmentsii) Off-balance sheet exposure including commitments (applicable credit conversion factor (CCF) is used for the conversion)The leverage ratio is intended to achieve the following objectives:a) constrain the build-up of leverage in the banking sector which can damage the broader financial system and the economy; andb) reinforce the risk based requirements with an easy to understand and a non-risk based measure.

Remuneration

Qualitative Disclosures: The following remuneration disclosures have been prepared in accordance with ‘Guidelines on Risk Based Capital Adequacy (RBCA) for banks’ provided by Bangladesh Bank. The prudential disclosures require that all banks meet the minimum requirements for public disclosure of qualitative and quantitative information of the remuneration practices.The qualitative remuneration disclosures are broader in scope and cover all the individuals included where as the quantitative information relates to senior managers and material risk takers of the Citibank N.A. Bangladesh, for the financial year ended December 31, 2017.

a) The information relating to the bodies that oversee remuneration disclosure: Citi operates globally in more than 100 countries; the Bank often tries to leverage individual employee development and exposure to multifaceted challenges by utilizing its global footprint. Moreover, the Bank maintains matrix reporting structure where all in-country functions report to respective functions in the region in addition to country management Remuneration is looked after by Country HR, Country Senior Personnel Team (CSPC), Regional Compensation and Benefit Team and respective Regional Business Heads.The Country Senior Personnel Committee (CSPC) of Citi Bangladesh is a committee that makes decision on major Human Resources related issue including but not limited to cross franchise compensation and benefits planning in Bangladesh.CSPC Consists of the following members. Citi Country Officer (CCO) & Managing Director, Head of Markets, Head of Operations & Technology, Head of Compliance, Country Finance Officer (CFO), Head of Legal, Head of HR.

At a regular interval Citibank; N.A. Bangladesh participates in Compensation & Benefit Surveys. In 2017, Citibank; N.A. participated in Compensation in Benefit Survey conducted by external consultant firm as per regional Compensation and Benefit Team approval. The remuneration policy of the bank covers all employees employed by the bank and reviewed regularly based on individual performance. The Citibank; N.A. Bangladesh Management Team comprising of Citi Country Officer & Managing Director, Country Finance Officer, Citi Country Compliance Officer, Head of O&T, Country Legal Counsel, Head of Treasury & Trade Solutions, Head of Corporate & Investment Banking, Country HR Officer, Head of Internal Audit are the material risk takers.

b) Design and structure of remuneration process Annual Salary Review The annual salary review process is carried out through a common review date in 4th Quarter every year. All eligible employees come up for consideration for merit increase review on this date. The performance rating of an employee and current pay in the grade are important in determining the quantum of the increase. One important factor that determines that amount of merit increase is the organization’s ability to pay. Accordingly, in 4th Quarter 2017 an annual complesation review for all eligible employees was being completed. Annual Salary Increase Rate is expressed as a percentage of the current total cash salary and would indicate the merit increase budget for a year. Annual Salary Increase percentage are determined both grade wise and function wise (for specialized functions) based on market data and the Citibank Senior Policy Committee decision on the targeted positioning for the two categories and regional compensation team guidance. Remuneration consists of Fixed Pay and Variable Pay and non cash Benefits.

Annual Bonus If business conditions permit, and depending on an employee’s performance, the Bank may pay a bonus to selected employees. The following is the bonus guideline: The decision of whether to pay a bonus and, if so, how much, is at the sole discretion of management. Anyone who is not an active employee of the Bank for at least minimum months (as stated by the regional team during year end process) of the period for which the bonus applies will not be entitled to receive, and therefore, will not be paid a bonus. The Bank reserves the right to pay all or part of bonuses in a form other than cash including, for example, a contingent, deferred stock award or stock options subject to rules and regulations of the country and management philosophy. The amount of the bonus will be determined by management based in part upon employee's individual performance, the performance of the business group, the performance of the Bank and the performance of Citigroup Inc. In 4th Quarter 2017, an annual bonus exercise was done for all eligible employees. All eligible employees are entitled to Festival Bonus in line with HR policy and local regulation. The Bank also have Provident Fund and Gratuity Fund for all eligible employees in line with local regulations. Salary survey market report contains different percentiles of different job grades. During year end process, country HR and regional business heads review market data and employee performance ratings to come to decision in connection to individual pay grades within the approved the salary budget. As mentioned previously, Citibank follows matrix structure of reporting. All employees belonging to Risk and Compliance are appraised by their respective regional chain. All bonus and annual salary increases (as admissible) are monitored and controlled by their respective business chain and concerned regional HR team independently.

c) Current and Future risks of remuneration process The following risks are considered while evaluating current and future risks: 1. Internal Control and Compliance : Compensation Process is reviewed for compliance with local and regional guidelines. 2. Operational Risk : Compensation Process is reviewed to mitigate operational losses 3. Regulatory Risk : Compensation Process is reviewed to check compliance with local regulations 4. Reputational Risk Compensation Process is reviewed to mitigate any reputational risk.

d & e) Performance management Performance Management Philosophy at Citi Citi employs a consistent Performance Management process that drives meaningful & specific feedback used to clarify expectations, facilitate growth, and create a foundation for pay and promotion decisions. The resulting process is driven by the following guiding principles:Drive a culture of meritocracy, differentiating based on performance Manage performance against challenging goals Evaluate employees on how goals were achieved, not just end results Provide balanced feedback and direction regarding strengths and areas for development

Citi Performance Management Process ComponentsThe Performance Management process is an ongoing, year-round process, and consists of 4 primary components:Goal Setting, Development Planning, Mid-Year Conversation, Year-End Review

In addition, Performance Management is a dynamic process which includes ongoing review of goals, coaching, development, feedback and recognition throughout the year. These ongoing discussions are critical for a successful process. The bank has structured Performance Improvement Plan in the event when performance metrics are not in expected level.

f) Description of the different forms of variable remuneration that the bank utilizes and the rationale for using these different forms.The purpose of the plan is to reward and retain eligible employees through discretionary incentive and/ or retention awards under specific terms and conditions contingent upon company's performance , an eligible employees sector or business unit performance , an eligible employees individual performance, or any combination of the foregoing. Cash Bonus : Usually paid during Year End Process (annually), which is payable to an employee in currency and not in shares of company common stock or derivatives thereof, and is not subject to deferral.

Disclosure on Market Discipline as required under Pillar III of Basel IIIfor the year ended 31 December 2017

Fund Deposited with BBRetained EarningsActuarial gain/(loss)Total CET 1 CapitalAdditional Tier 1

Total Tier 1 Capital

4,771,628,235 5,260,338,620

(112,143,880) 9,919,822,977

-

9,913,854,469

4,540,836,059 4,749,472,584

(112,722,984) 9,177,585,659

-

9,177,585,659

Tier-1 (going-concern capital )

Common Equity Tier 1 (CET 1 Capital)

2016

BDT

2017

BDT

400,326,617

12,354,072 412,680,689

10,326,535,158

Tier 2 Capital (gone-concern capital)

General Provision Revaluation Reserve for HFT Securities up to 50%of the 2014 balance

© Regulatory Adjustments/Deductions from capital

65,453,395 7,412,443

72,865,838

10,259,637,828

347,700,641

12,354,072 360,054,713

9,537,640,372

65,432,199 4,941,629

70,373,828

9,467,266,544

Deferred tax assets on specific provision (from CET 1 Capital)Revaluation Reserve for HFT Securities (20% for 2015)Total

(d) Total eligible capital (b-c)


Details of Risk Weighted Assets are as below:

Risk Weighted Assets as Risk Category:

Credit Risk On Balance Sheet Exposures Off Balance Sheet Exposures

Total Credit Risk

Market Risk

Operational Risk

Total Risk Weighted Assets

Capital Requirement

(b) Capital requirement for Credit Risk (c) Capital requirement for Market Risk (d) Capital requirement for Operational Risk Total

(e) Ratios (stand alone basis)Capital to Risk Weighted Assets Ratio (CRAR)Common Equity Tier-1 to RWATier-1 Capital to RWATier-2 Capital to RWA

(f) Capital Conservaton Buffer

(g) Available Capital under Pillar 2 Requirement

2017

BDT

15,696,652,280 6,115,832,668

21,812,484,948

740,944,485

3,541,168,224

26,094,597,658

2,181,248,495 74,094,449 354,116,822

2,609,459,766

39.32%37.76%37.76%

1.55%

5,919,822,977

6,259,637,828

2016

BDT

10,811,484,172 6,083,095,143

16,894,579,315

1,240,599,901

3,843,029,398

21,978,208,615

1,689,457,932 124,059,990

384,302,940 2,197,820,861

43.08%41.46%41.46%

1.62%

5,177,585,659

5,467,266,544

2016

BDT

2017

BDT(b) Gross Credit Risk Exposure

Claims on Bangladesh Government and Bangladesh BankClaims on Banks and NBFIsClaims on corporateFixed assetsAll other assets Off-balance sheet itemsTotal

Major types of Loans & advances:

Continuous loanDemand LoanFixed term loanStaff loan Short Term Agri-credit and MicrocreditTotal

7,004,601,370 5,051,951,089 15,316,219,909

178,282,773 1,833,101,301

7,782,439,629 37,166,596,072

9,159,560,456 10,701,209,258 8,040,387,301

218,135,362 2,624,450,166 6,433,420,623 37,177,163,166

2,866,306,797 13,247,232,609

14,278,677 -

213,703,194 16,341,521,278

1,101,236,081 7,413,663,380

14,278,677 231,800,778 193,873,333

8,954,852,250

Rural

Chittagong Division

Chittagong Division

Dhaka Division

(c) Geographical distribution of exposures, broken down in significant areas by major types of credit exposure:

Urban Dhaka Division

-

-

15,837,174,056 504,347,222

8,943,042,250

11,810,000

-

- 16,341,521,278 8,954,852,250

Agriculture (Dairy, Poultry, Nursery, Hatchery etc)Readymade GarmentsPharmaceutical IndustriesChemical IndustriesFuel & ElectricityAgro based IndustriesIT SectorTelecommunicationFinancial CorporationOthers

(d) Industry or counterparty type distribution of exposures, broken down by major types of credit exposure:

213,703,194 676,933,177

1,286,804,683 1,116,228,237

2,482,987,184 3,460,700,719

10,641,969 1,410,732,340 2,213,917,974

3,468,871,802

16,341,521,278

193,873,333 1,077,793,053 490,530,960 342,494,641 413,324,687

1,698,328,088 789,451,986

1,363,761,924 1,721,224,226 864,069,351

8,954,852,250

Total

(e) Residual contractual maturity breakdown of the whole portfolio, broken down by major types of credit exposure:PayableOn demandWithin one monthWithin one to three monthsWithin three to twelve monthsWithin one to five yearsMore than five years

2,798,390,448 3,722,105,081

5,824,025,981 3,776,659,577

- 220,340,191

1,033,372,233 2,332,798,947 2,703,639,333 2,432,953,269

231,800,778 220,287,691

16,341,521,278 8,954,852,250

Special Mention AccountSubstandardDoubtfulBad/Loss

(f) Amount of impaired loans, Specific and general provisions & Charges for specific allowances and charge-offs during the period:

- - -

220,340,191 220,340,191

---

220,287,691

220,287,691

294,324,623

General Provision 193,296,099 162,113,674

355,409,772

Special Provision 132,263,450

162,061,174

-Charges for specific allowances and charge-

Specific and general provisions :

(g) Gross Non Performing Assets (NPAs) 220,340,191

1.35%

Opening balance 220,287,691 52,500

-

220,340,191

Additions (net)

Reductions

Closing balance

Opening balance 162,061,174 52,500

- -

162,113,674

Provision made during the period

Write-off

Write -back of excess provisions

Closing balance

-

220,287,691

2.46%

220,244,191 43,500

-

220,287,691

162,017,674 43,500

- -

162,061,174

Non Performing Assets ( NPAs) to Outstanding Loans & advances

Movement of specific provisions for NPAs

Movement of Non Performing Assets ( NPAs)

2016

BDT

2017

BDTQuantitative Disclosures:

Interest rate risk

Equity position risk

Foreign exchange risk

Commodity risk

The capital requirement for: 61,932,178

- 12,162,271

74,094,449

73,588,156 -

50,471,834

124,059,990


Capital Charge for operational risk

2016

Taka

2017

Taka 354,116,822

384,302,940

2016BDT

2017BDT


Leverage RatioOn balance sheet exposureOff balance sheet exposureTotal exposure

21.21% 37,749,580,407

8,774,916,906 46,459,043,917

19.83% 39,580,149,243 6,433,420,623

45,948,137,668

20162017Quantitative Disclosures:

Liquidity Coverage Ratio (LCR)Net Stable Fundng Ratio (NSFR)Stock of High quality liquid assetTotal net cash outflows over the next 30 calendar daysAvailable amount of stable fundingRequired amount of stable funding

124.25%123.20%

10,747,360,664 1,910,833,901 32,010,801,183

25,982,570,303

143.32%131.00%

13,856,852,591 797,629,974

32,704,320,864 24,965,817,421

Citibank, N.A.




of 11

2016

BDT

2017

BDTQuantitative Disclosures:

6,000,000 6,000,000

- -

- -

- -

- -

- -

Unquoted shares in Central Depository Bangladesh Limited

The cumulative realized gains (losses) arising from sales

Capital Charge on Equities

Total unrealized gains (losses)

Total latent revaluation gains (losses)

Any amounts of the above included in Tier 2 capital

Market Value of AssetsMarket Value of LiabilitiesWeighted Average of Duration of Assets (DA)Weighted Average of Duration of Liabilities (DL)Duration GAP (DA-DL) Yield to Maturity (YTM -Assets) Yield to Maturity (YTM -Liability)Fall in MV of EquityChange in market value of equity due to an increase in interest rate @3% Stress Testing (Interest Rate Shock) Regulatory capital (after shock)CAR (after shock)

Quantitative Disclosures: 2016

BDT

2017

BDT 38,111,122,815

27,996,952,274 0.200.02 0.18

3.38%0.42%

199,584,073

(203,146,795)

10,076,546,344 38.62%

40,153,839,219 30,549,841,280

0.240.01

0.23 2.18%0.15%

411,652,306

(272,560,950)

9,223,708,080 41.97%

2017BDT

2016BDT

89 87

4 5

- -

- -

-

152

25,346,220

135

26,095,704

--

-

3,324,709

399,601,187

45,094,196

2,780,274

Cash, Shares

N/A

N/A

N/A

-

-

368,742,580

44,206,679

Cash, Shares

N/A

N/A

N/A

Number of meetings held by the main body overseeingremuneration during the financial year andremuneration paid to its member.

Number of employees having received a variableremuneration award during the financial year.

Remuneration paid to the member of body overseeingremuneration during the financial year.

Number of guaranteed bonuses awarded during thefinancial year.

Amount of guaranteed bonuses awarded during thefinancial year.

Number of sign-on awards made during the financialyear.

Total amount of sign-on awards made during thefinancial year.

Number and total amount of severance payments madeduring the financial year

Total amount of outstanding deferred remuneration,split into cash, shares and share-linked instruments andother forms.

Total amount of deferred remuneration paid out in thefinancial year.

Fixed Amount of remuneration awards for thefinancial year

Variable Amount of remuneration awards for thefinancial year

Different forms used (cash, shares and share linkedinstruments, other forms).

Total amount of outstanding deferred remunerationand retained remuneration

Total amount of reductions during the financial yeardue to ex post explicit adjustments.

Total amount of reductions during the financial yeardue to ex post implicit adjustments.

citibank, n.a. (bangladesh branches) report and financial … · 2018-03-06 · as at and for the...

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